Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 08, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | DIVALL INSURED INCOME PROPERTIES 2 LIMITED PARTNERSHIP | |
Entity Central Index Key | 0000825788 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 0 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
Balance Sheets
Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
INVESTMENT PROPERTIES (Note 3): | ||
Land | $ 2,794,122 | $ 2,794,122 |
Buildings | 4,017,412 | 4,017,412 |
Accumulated depreciation | (3,867,565) | (3,776,718) |
Net investment properties | 2,943,969 | 3,034,816 |
OTHER ASSETS: | ||
Cash | 67,618 | 99,360 |
Cash held in Indemnification Trust (Note 7) | 475,574 | 464,710 |
Security deposits escrow | 69,437 | 74,681 |
Rents and other receivables | 370,491 | 533,344 |
Deferred tenant award proceeds escrow | 47,785 | 64,041 |
Prepaid insurance | 489 | 5,133 |
Utility deposit | 6,530 | |
Deferred charges, net | 205,709 | 186,517 |
Total other assets | 1,237,103 | 1,434,316 |
Total assets | 4,181,072 | 4,469,132 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 18,585 | 33,573 |
Due to General Partner (Note 5) | 1,211 | 998 |
Deferred rent | 45,723 | 62,183 |
Security deposits | 69,340 | 74,340 |
Total current liabilities | 134,859 | 171,094 |
CONTINGENCIES AND COMMITMENTS (Note 6 and 7) | ||
General Partner - | ||
Cumulative net income (retained earnings) | 373,441 | 368,941 |
Cumulative cash distributions | (154,700) | (152,900) |
Total general partners' capital | 218,741 | 216,041 |
Limited Partners (46,280.3 interests outstanding at September 30, 2019 and December 31, 2018) | ||
Capital contributions | 46,280,300 | 46,280,300 |
Offering Costs | (6,921,832) | (6,921,832) |
Cumulative net income (retained earnings) | 43,336,501 | 42,891,026 |
Cumulative cash distributions | (78,027,268) | (77,327,268) |
Total limited partners' capital | 4,667,701 | 4,922,226 |
Former General Partner - | ||
Cumulative net income (retained earnings) | 707,513 | 707,513 |
Cumulative cash distributions | (1,547,742) | (1,547,742) |
Total former general partners' capital | (840,229) | (840,229) |
Total partners' capital | 4,046,213 | 4,298,038 |
Total liabilities and partners' capital | $ 4,181,072 | $ 4,469,132 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Limited Partners' capital account, interests outstanding | 46,280.3 | 46,280.3 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
OPERATING REVENUES: | ||||
Rental income (Note 3) | $ 460,103 | $ 415,249 | $ 985,775 | $ 951,386 |
TOTAL OPERATING REVENUES | 460,103 | 415,249 | 985,775 | 951,386 |
EXPENSES: | ||||
Partnership management fees (Note 5) | 70,794 | 69,108 | 211,258 | 206,364 |
Insurance | 1,466 | 1,465 | 4,397 | 4,396 |
General and administrative | 9,723 | 20,345 | 29,741 | 51,786 |
Advisory Board fees and expenses | 2,625 | 2,625 | 6,500 | 7,875 |
Professional services | 41,261 | 247,959 | 189,912 | 410,314 |
Other Property Expenses | 3,749 | (89) | 11,553 | |
Depreciation | 30,282 | 30,283 | 90,847 | 135,768 |
Amortization | 6,899 | 6,019 | 19,524 | 18,058 |
TOTAL OPERATING EXPENSES | 163,050 | 381,553 | 552,090 | 846,114 |
OTHER INCOME | ||||
Other miscellaneous income | 5,000 | |||
Other interest income | 5,633 | 4,484 | 11,290 | 7,824 |
TOTAL OTHER INCOME | 5,633 | 4,484 | 16,290 | 7,824 |
NET INCOME | 302,686 | 38,180 | 449,975 | 113,096 |
NET INCOME ALLOCATED- GENERAL PARTNER | 3,027 | 382 | 4,500 | 1,131 |
NET INCOME ALLOCATED- LIMITED PARTNERS | $ 299,659 | $ 37,798 | $ 445,475 | $ 111,965 |
Based on 46,280.3 interests outstanding: (Basic and diluted) | ||||
NET INCOME PER LIMITED PARTNERSHIP INTEREST | $ 6.47 | $ 0.82 | $ 9.63 | $ 2.42 |
Statements of Operations (Una_2
Statements of Operations (Unaudited) (Parenthetical) - shares | Sep. 30, 2019 | Dec. 31, 2018 |
Income Statement [Abstract] | ||
Limited Partners' capital account, interests outstanding | 46,280.3 | 46,280.3 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income from continuing operations | $ 449,975 | $ 113,096 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Depreciation and amortization | 110,371 | 153,826 |
Changes in operating assets and liabilities | ||
Decrease in rents and other receivables | 184,868 | 289,298 |
Increase in long-term rent receivable | (22,015) | |
Decrease (Increase) in security deposit escrow | 5,244 | (121) |
Decrease in utility deposit | 6,530 | |
Decrease in deferred rent award escrow | (204) | (288) |
Decrease in prepaid insurance | 4,644 | 3,706 |
Decrease in accounts payable and accrued expenses | (14,988) | (1,231) |
Decrease in unearned rental income | (5,000) | |
Increase in property tax payable | 4,635 | |
Payment of leasing commission | (38,716) | |
Security deposit refund | (5,000) | |
Increase (Decrease) in due to General Partner | 213 | (1,085) |
Net cash from operating activities | 680,922 | 556,836 |
CASH FLOWS USED IN INVESTING ACTIVITIES: | ||
Interest applied to Indemnification Trust account | (10,864) | (6,889) |
Net cash used in investing activities | (10,864) | (6,889) |
CASH FLOWS USED IN FINANCING ACTIVITIES: | ||
Cash distributions to Limited Partners | (700,000) | (550,000) |
Cash distributions to General Partner | (1,800) | (453) |
Net cash used in financing activities | (701,800) | (550,453) |
NET DECREASE IN CASH | (31,742) | (506) |
CASH AT BEGINNING OF PERIOD | 99,360 | 145,674 |
CASH AT END OF PERIOD | $ 67,618 | $ 145,168 |
Statements of Partner's Capital
Statements of Partner's Capital (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Cumulative Net Income [Member] | General Partner [Member] | ||||||||
Partners' Capital, Beginning Balance | $ 370,414 | $ 368,916 | $ 368,941 | $ 366,065 | $ 364,759 | $ 365,316 | $ 368,941 | $ 365,316 |
Cash Distributions | ||||||||
Net Income | 3,027 | 1,498 | (25) | 382 | 1,306 | (557) | ||
Partners' Capital, Ending Balance | 373,441 | 370,414 | 368,916 | 366,447 | 366,065 | 364,759 | 373,441 | 366,447 |
Cumulative Net Income [Member] | Limited Partner [Member] | ||||||||
Partners' Capital, Beginning Balance | 43,036,843 | 42,888,594 | 42,891,026 | 42,606,314 | 42,476,972 | 42,532,147 | 42,891,026 | 42,532,147 |
Cash Distributions | ||||||||
Net Income | 299,658 | 148,249 | (2,432) | 37,798 | 129,342 | (55,175) | ||
Partners' Capital, Ending Balance | 43,336,501 | 43,036,843 | 42,888,594 | 42,644,112 | 42,606,314 | 42,476,972 | 43,336,501 | 42,644,112 |
Cumulative Cash Distributions [Member] | General Partner [Member] | ||||||||
Partners' Capital, Beginning Balance | (153,489) | (152,900) | (152,900) | (151,749) | (151,449) | (151,449) | (152,900) | (151,449) |
Cash Distributions | (1,211) | (589) | (153) | (300) | ||||
Net Income | ||||||||
Partners' Capital, Ending Balance | (154,700) | (153,489) | (152,900) | (151,902) | (151,749) | (151,449) | (154,700) | (151,902) |
Cumulative Cash Distributions [Member] | Limited Partner [Member] | ||||||||
Partners' Capital, Beginning Balance | (77,927,268) | (77,827,268) | (77,327,268) | (77,227,268) | (76,777,268) | (76,677,268) | (77,327,268) | (76,677,268) |
Cash Distributions | (100,000) | (100,000) | (500,000) | (450,000) | (100,000) | |||
Net Income | ||||||||
Partners' Capital, Ending Balance | (78,027,268) | (77,927,268) | (77,827,268) | (77,227,268) | (77,227,268) | (76,777,268) | (78,027,268) | (77,227,268) |
Capital Contributions Net of Offering Costs [Member] | Limited Partner [Member] | ||||||||
Partners' Capital, Beginning Balance | 39,358,468 | 39,358,468 | 39,358,468 | 39,358,468 | 39,358,468 | 39,358,468 | 39,358,468 | 39,358,468 |
Cash Distributions | ||||||||
Net Income | ||||||||
Partners' Capital, Ending Balance | 39,358,468 | 39,358,468 | 39,358,468 | 39,358,468 | 39,358,468 | 39,358,468 | 39,358,468 | 39,358,468 |
Reallocation [Member] | Limited Partner [Member] | ||||||||
Partners' Capital, Beginning Balance | (840,229) | (840,229) | (840,229) | (840,229) | (840,229) | (840,229) | (840,229) | (840,229) |
Cash Distributions | ||||||||
Net Income | ||||||||
Partners' Capital, Ending Balance | (840,229) | (840,229) | (840,229) | (840,229) | (840,229) | (840,229) | (840,229) | (840,229) |
General Partner [Member] | ||||||||
Partners' Capital, Beginning Balance | 216,925 | 216,016 | 216,041 | 214,316 | 213,310 | 213,867 | 216,041 | 213,867 |
Cash Distributions | (1,211) | (589) | (153) | (300) | ||||
Net Income | 3,027 | 1,498 | (25) | 382 | 1,306 | (557) | ||
Partners' Capital, Ending Balance | 218,741 | 216,925 | 216,016 | 214,545 | 214,316 | 213,310 | 218,741 | 214,545 |
Limited Partner [Member] | ||||||||
Partners' Capital, Beginning Balance | 3,627,814 | 3,579,565 | 4,081,997 | 3,897,285 | 4,217,943 | 4,373,118 | 4,081,997 | 4,373,118 |
Cash Distributions | (100,000) | (100,000) | (500,000) | (450,000) | (100,000) | |||
Net Income | 299,658 | 148,249 | (2,432) | 37,798 | 129,342 | (55,175) | ||
Partners' Capital, Ending Balance | 3,827,472 | 3,627,814 | 3,579,565 | 3,935,083 | 3,897,285 | 4,217,943 | 3,827,472 | 3,935,083 |
Partners' Capital, Beginning Balance | 3,844,739 | 3,795,581 | 4,298,038 | 4,111,601 | 4,431,253 | 4,586,985 | 4,298,038 | 4,586,985 |
Cash Distributions | (101,211) | (100,589) | (500,000) | (153) | (450,300) | (100,000) | ||
Net Income | 302,686 | 149,747 | (2,457) | 38,180 | 130,648 | (55,732) | 449,975 | 113,096 |
Partners' Capital, Ending Balance | $ 4,046,213 | $ 3,844,739 | $ 3,795,581 | $ 4,149,629 | $ 4,111,601 | $ 4,431,253 | $ 4,046,213 | $ 4,149,629 |
Statements of Partner's Capit_2
Statements of Partner's Capital (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | |
Statement of Partners' Capital [Abstract] | ||||||
Cash distributions per limited partnership interest | $ 2.16 | $ 2.16 | $ 10.80 | $ 2.16 | $ 9.72 | $ 2.16 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | 1. ORGANIZATION: The Partnership was formed on November 20, 1987, pursuant to the Uniform Limited Partnership Act of the State of Wisconsin. The initial capital, contributed during 1987, consisted of $300, representing aggregate capital contributions of $200 by the former general partners and $100 by the initial limited partner. A subsequent offering of limited partnership interests closed on February 22, 1990, with 46,280.3 limited partnership interests having been sold in that offering, resulting in total proceeds to the Partnership, net of underwriting compensation and other offering costs, of $39,358,468. The Partnership is currently engaged in the business of owning and operating its investment portfolio of commercial real estate properties (each a “Property”, and collectively, the “Properties”). The Properties are leased on a triple net basis primarily to, and operated by, franchisors or franchisees of national, regional, and local retail chains under primarily long-term leases. The lessees are operators of fast food, family style, and casual/theme restaurants. As of September 30, 2019, the Partnership owned ten Properties, which are located in a total of three states. The Limited Partnership Agreement, as amended from time to time (collectively, the “Partnership Agreement”), stipulates that the Partnership is scheduled to be dissolved on November 30, 2020, or earlier upon the prior occurrence of any of the following events: (a) the disposition of all its Properties; (b) the written determination by the General Partner, that the Partnership’s assets may constitute “plan assets” for purposes of ERISA; (c) the agreement of limited partners owning a majority of the outstanding limited partner interests to dissolve the Partnership; or (d) the dissolution, bankruptcy, death, withdrawal, or incapacity of the last remaining General Partner, unless an additional General Partner is elected by a majority of the limited partners. During the second and third quarters of the nine odd numbered years from 2001 through 2017, consent solicitations were circulated to the Partnership’s limited partners which, if approved by the limited partners, would have authorized the General Partner to initiate the potential sale of all of the Properties and the dissolution of the Partnership (each a “Consent”). Limited partners owning a majority of the outstanding limited partnership interests did not vote in favor of any of the Consents. Therefore, the Partnership continues to operate as a going concern. On May 18, 2018, the Partnership concluded a special consent solicitation process in which it solicited affirmative consents from the limited partners to authorize the General Partner to sell all or substantially all of the Partnership’s properties, and to subsequently liquidate and dissolve the Partnership upon completion of the sale (collectively, the “Transaction”). The Transaction was approved by written consent of the holders of a majority of the outstanding limited partnership interests. On July 24, 2018, the Partnership mailed to interested parties a confidentiality agreement and a letter that included procedures, terms and conditions (the “Procedures”) for a sealed bid sale for the potential sale of the Properties. Under the Procedures communicated to all prospective bidders, the deadline for submitting bids complying with the Procedures was September 28, 2018 (the “Bid Deadline”). On October 2, 2018, the General Partner determined that no bid response received by the Bid Deadline satisfied the terms and conditions of the Procedures. Accordingly, the General Partner determined it was in the best interests of the Partnership to suspend its efforts with respect to consummating the Transaction, and the sealed bid process was terminated due to failure to receive a compliant bid. |
Recently Adopted Accounting Pri
Recently Adopted Accounting Principles | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Adopted Accounting Principles | 2. RECENTLY ADOPTED ACCOUNTING PRINCIPLES: In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements for the analysis of partners’ capital for interim financial statements. Under the amendments, an analysis of changes in each caption of partners’ capital presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. The Partnership’s first presentation of year-to-date quarterly changes in partners’ capital was included in its Form 10-Q for the quarter ended March 31, 2019. In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of the lease payments. The accounting guidance for lessors is largely unchanged. The ASU is effective for annual and interim periods beginning after December 15, 2018. It is to be adopted using a modified retrospective approach. The Partnership has adopted the accounting pronouncement effective January 1, 2019 and the adoption of the standard did not have a material impact on the Partnership’s financial statements. |
Investment Properties
Investment Properties | 9 Months Ended |
Sep. 30, 2019 | |
Real Estate [Abstract] | |
Investment Properties | 3. INVESTMENT PROPERTIES: The total cost of the Properties includes the original purchase price plus acquisition fees and other capitalized costs paid to an affiliate of the former general partners of the Partnership. As of September 30, 2019, the Partnership owned 10 Properties, nine of which contained fully constructed fast-food/casual dining restaurant facilities. The following are operated by tenants at the aforementioned nine Properties: eight separate Wendy’s restaurants, and an Applebee’s restaurant. The tenant for the Property operated as an Applebee’s restaurant has been in Chapter 11 bankruptcy since May 2018 and, in January 2019, this tenant filed with the court to continue with the Partnership’s lease without modification. As of September 30, 2018, the Martinez, GA Property was leased by Brakes4Less of Columbia, Inc. Per the terms of the First Amendment to the Brakes4Less lease dated January 15, 2019, the first 12 months’ rent was abated. The 10 Properties are located in a total of three states. |
Partnership Agreement
Partnership Agreement | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Partnership Agreement | 4. PARTNERSHIP AGREEMENT: The Partnership Agreement was amended, effective as of November 9, 2009, to extend the term of the Partnership to November 30, 2020, or until dissolution prior thereto pursuant to the consent of limited partners owning a majority of the outstanding limited partnership interests. Under the terms of the Partnership Agreement, as amended, net profits or losses from operations are allocated 99% to the limited partners and 1% to the current General Partner. The November 9, 2009 amendment also provided for distributions from Net Cash Receipts, as defined, to be made 99% to limited partners and 1% to The Provo Group, Inc. (“TPG”, or the “General Partner”), the current General Partner, provided that quarterly distributions are cumulative and are not to be made to the current General Partner unless and until each limited partner has received a distribution from Net Cash Receipts in an amount equal to 10% per annum, cumulative simple return on his, her or its Adjusted Original Capital, as defined, from the Return Calculation Date, as defined, except to the extent needed by the General Partner to pay its federal and state income taxes on the income allocated to it attributable to such year. The provisions regarding distribution of Net Proceeds, as defined, provide that Net Proceeds are to be distributed as follows: (a) to the limited partners, an amount equal to 100% of their Adjusted Original Capital; (b) then, to the limited partners, an amount necessary to provide each limited partner a liquidation preference equal to a 13.5% per annum, cumulative simple return on Adjusted Original Capital from the Return Calculation Date including in the calculation of such return on all prior distributions of Net Cash Receipts and any prior distributions of Net Proceeds under this clause, except to the extent needed by the General Partner to pay its federal and state income tax on the income allocated to it attributable to such year; and (c) then, to limited partners, 99%, and to the General Partner, 1%, of remaining Net Proceeds available for distribution. |
Transactions with General Partn
Transactions with General Partner and its Affiliates | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Transactions with General Partner and its Affiliates | 5. TRANSACTIONS WITH GENERAL PARTNER AND ITS AFFILIATES: Pursuant to the terms of the Permanent Manager Agreement (“PMA”) executed in 1993 and renewed for an additional two-year term as of January 1, 2019, the General Partner receives a base fee (the “Base Fee”) for managing the Partnership equal to four percent of gross receipts, subject initially to a minimum annual Base Fee. The PMA also provides that the Partnership is responsible for reimbursement of the General Partner for office rent and related office overhead (“Expenses”) up to an initial annual maximum of $13,250. Both the Base Fee and Expenses reimbursement are subject to annual Consumer Price Index based adjustments. Effective March 1, 2019, the minimum annual Base Fee and the maximum Expenses reimbursement increased by 2.44% from the prior year, which represents the allowable annual Consumer Price Index adjustment per the PMA. Therefore, as of March 1, 2019, the minimum annual Base Fee paid by the Partnership was raised to $283,176 and the maximum annual Expenses reimbursement was increased to $22,848. For purposes of computing the four percent overall fee paid to the General Partner, gross receipts include amounts recovered in connection with the misappropriation of assets by the former general partners and their affiliates. The fee received by the General Partner from the Partnership on any amounts recovered reduce the four percent minimum fee by that same amount. Amounts paid and/or accrued to the General Partner and its affiliates for the three- and nine-month periods ended September 30, 2019 and 2018 are as follows: Incurred for the Incurred for the Incurred for the Incurred for the Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended (unaudited) (unaudited) (unaudited) (unaudited) General Partner Management fees $ 70,794 $ 69,108 $ 211,258 $ 206,364 Overhead allowance 5,712 5,577 17,046 16,653 Leasing commissions - - 12,906 - Reimbursement for out-of-pocket expenses - - 2,500 2,500 Cash distribution 1,211 153 1,800 453 $ 77,717 $ 74,838 $ 245,510 $ 225,970 At September 30, 2019 and December 31, 2018, $1,211 and $998, respectively, was payable to the General Partner. As of September 30, 2019, Jesse Small, an Advisory Board Member, beneficially owned greater than ten percent of the Partnership’s outstanding limited partnership interests. Amounts paid to Mr. Small for his services as a member of the Advisory Board for the three- and nine-month periods ended September 30, 2019 and 2018 are as follows: Three Month Three Month Nine Month Nine Month (Unaudited) (Unaudited) (Unaudited) (Unaudited) Advisory Board Fees paid $ 875 $ 875 $ 2,625 $ 2,625 |
Contingent Liabilities
Contingent Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingent Liabilities | 6. CONTINGENT LIABILITIES: According to the Partnership Agreement, TPG, as General Partner may receive a disposition fee not to exceed three percent of the contract price on the sale of the properties of the Partnership and two affiliated publicly registered limited partnerships, DiVall Insured Income Fund Limited Partnership (“DiVall 1”), which was dissolved December of 1998, and DiVall Income Properties 3 Limited Partnership, which was dissolved in December 2003 (“DiVall 3”), and together with the Partnership and DiVall 1, the “three original partnerships”). In addition, fifty percent of all such disposition fees earned by TPG were to be escrowed until the aggregate amount of recovery of the funds misappropriated from the three original partnerships by the former general partners was greater than $4,500,000. Upon reaching such recovery level, full disposition fees would thereafter be payable, and fifty percent of the previously escrowed amounts would be paid to TPG. At such time as the recovery exceeded $6,000,000 in the aggregate, the remaining escrowed disposition fees were to be paid to TPG. If such levels of recovery were not achieved, TPG would contribute the amounts escrowed toward the recovery until the three original partnerships were made whole. In lieu of a disposition fee escrow, fifty percent of all such disposition fees previously discussed were paid directly to a restoration account and then distributed among the three original partnerships; whereby the three original partnerships recorded the recoveries as income. After the recovery level of $4,500,000 was exceeded, fifty percent of the total disposition fee amount paid to the three original partnerships recovery through the restoration account (in lieu of the disposition fee escrow) was refunded to TPG during March 1996. The remaining fifty percent amount allocated to the Partnership through the restoration account, and which was previously reflected as Partnership recovery income, may be owed to TPG if the $6,000,000 recovery level is met. As of September 30, 2019, the Partnership may owe TPG $16,296 if the $6,000,000 recovery level is achieved. TPG does not expect any future refund, as it is uncertain that such a $6,000,000 recovery level will be achieved. |
PMA Indemnification Trust
PMA Indemnification Trust | 9 Months Ended |
Sep. 30, 2019 | |
Banking and Thrift [Abstract] | |
PMA Indemnification Trust | 7. PMA INDEMNIFICATION TRUST: The PMA provides that TPG will be indemnified from any claims or expenses arising out of, or relating to, TPG serving in the capacity of General Partner or as substitute general partner, so long as such claims do not arise from fraudulent or criminal misconduct by TPG. The PMA provides that the Partnership will fund this indemnification obligation by establishing a reserve of up to $250,000 of Partnership assets which would not be subject to the claims of the Partnership’s creditors. An Indemnification Trust (the “Trust”) serving such purposes has been established at United Missouri Bank, N.A. The corpus of the Trust has been fully funded with Partnership assets. Funds are invested in U.S. Treasury securities at fair value at level 1. In addition, $225,574 of earnings has been credited to the Trust as of September 30, 2019. The rights of TPG to the Trust shall be terminated upon the earliest to occur of the following events: (i) the written release by TPG of any and all interest in the Trust; (ii) the expiration of the longest statute of limitations relating to a potential claim which might be brought against TPG and which is subject to indemnification; or (iii) a determination by a court of competent jurisdiction that TPG shall have no liability to any person with respect to a claim which is subject to indemnification under the PMA. At such time as the indemnity provisions expire or the full indemnity is paid, any funds remaining in the Trust will revert back to the general funds of the Partnership. |
Transactions with General Par_2
Transactions with General Partner and its Affiliates (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of Amounts Paid and/or Accrued to General Partner and its Affiliates | Amounts paid and/or accrued to the General Partner and its affiliates for the three- and nine-month periods ended September 30, 2019 and 2018 are as follows: Incurred for the Incurred for the Incurred for the Incurred for the Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended (unaudited) (unaudited) (unaudited) (unaudited) General Partner Management fees $ 70,794 $ 69,108 $ 211,258 $ 206,364 Overhead allowance 5,712 5,577 17,046 16,653 Leasing commissions - - 12,906 - Reimbursement for out-of-pocket expenses - - 2,500 2,500 Cash distribution 1,211 153 1,800 453 $ 77,717 $ 74,838 $ 245,510 $ 225,970 |
Schedule of Advisory Board Fees Paid to Jesse Small | Amounts paid to Mr. Small for his services as a member of the Advisory Board for the three- and nine-month periods ended September 30, 2019 and 2018 are as follows: Three Month Three Month Nine Month Nine Month (Unaudited) (Unaudited) (Unaudited) (Unaudited) Advisory Board Fees paid $ 875 $ 875 $ 2,625 $ 2,625 |
Organization (Details Narrative
Organization (Details Narrative) | Feb. 22, 1990USD ($)shares | Dec. 31, 1987USD ($) | Sep. 30, 2019Number |
Aggregate capital contributions | $ 300 | ||
Limited partnership interests outstanding | shares | 46,280.3 | ||
Proceeds to partnership, net of underwriting compensation and other offering costs | $ 39,358,468 | ||
Number of properties owned | Number | 10 | ||
Location of properties | Number | 3 | ||
General Partner [Member] | |||
Aggregate capital contributions | 200 | ||
Limited Partner [Member] | |||
Aggregate capital contributions | $ 100 |
Investment Properties (Details
Investment Properties (Details Narrative) | Sep. 30, 2019RestaurantNumber |
Property leased to fully constructed fast-food restaurants | Number | 10 |
Location of properties | Number | 3 |
Wendy's Restaurants [Member] | |
Property leased to fully constructed fast-food restaurants | Restaurant | 8 |
Applebee's Restaurant [Member] | |
Property leased to fully constructed fast-food restaurants | Restaurant | 1 |
Partnership Agreement (Details
Partnership Agreement (Details Narrative) | Sep. 30, 2019 |
Limited Partner [Member] | |
Net profits or losses from operations amended | 99.00% |
Amended rate of net proceeds were to be distributed | 99.00% |
Cumulative simple return on adjusted original capital | 10.00% |
Amended distributions as percentage of adjusted original capital | 100.00% |
Liquidation preference of limited partners amended | 13.50% |
Net proceeds available for distribution | 99.00% |
General Partner [Member] | |
Net profits or losses from operations amended | 1.00% |
Amended rate of net proceeds were to be distributed | 1.00% |
Net proceeds available for distribution | 1.00% |
Transactions with General Par_3
Transactions with General Partner and its Affiliates (Details Narrative) - USD ($) | Mar. 01, 2019 | Jan. 02, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Related Party Transactions [Abstract] | ||||
Percentage of base fee on gross receipts | 4.00% | |||
Maximum reimbursement on office rent and related expenses | $ 22,848 | $ 13,250 | ||
Percentage of increase in base fee and expenses reimbursement | 2.44% | |||
Fees received from partnership, by general partner | $ 283,176 | |||
Payable to general partner | $ 1,211 | $ 998 |
Transactions with General Par_4
Transactions with General Partner and Its Affiliates - Schedule of Amounts Paid and/or Accrued to General Partner and its Affiliates (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Related Party Transactions [Abstract] | ||||
Management fees | $ 70,794 | $ 69,108 | $ 211,258 | $ 206,364 |
Overhead allowance | 5,712 | 5,577 | 17,046 | 16,653 |
Leasing commissions | 12,906 | |||
Reimbursement for out-of-pocket expenses | 2,500 | 2,500 | ||
Cash distribution | 1,211 | 153 | 1,800 | 453 |
Total general partner expense | $ 77,717 | $ 74,838 | $ 245,510 | $ 225,970 |
Transactions with General Par_5
Transactions with General Partner and its Affiliates - Schedule of Advisory Board Fees Paid to Jesse Small (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Jesse Small [Member] | ||||
Advisory Board Fees paid | $ 875 | $ 875 | $ 2,625 | $ 2,625 |
Contingent Liabilities (Details
Contingent Liabilities (Details Narrative) | 9 Months Ended |
Sep. 30, 2019USD ($)Property | |
Commitments and Contingencies Disclosure [Abstract] | |
Maximum percentage of disposition fees on sale of partnership properties | 3.00% |
Number of partnership properties for sale | Property | 3 |
Percentage of disposition fees to be escrowed | 50.00% |
Recovery level description | In addition, fifty percent of all such disposition fees earned by TPG were to be escrowed until the aggregate amount of recovery of the funds misappropriated from the three original partnerships by the former general partners was greater than $4,500,000. Upon reaching such recovery level, full disposition fees would thereafter be payable, and fifty percent of the previously escrowed amounts would be paid to TPG. At such time as the recovery exceeded $6,000,000 in the aggregate, the remaining escrowed disposition fees were to be paid to TPG. If such levels of recovery were not achieved, TPG would contribute the amounts escrowed toward the recovery until the three original partnerships were made whole. In lieu of a disposition fee escrow, fifty percent of all such disposition fees previously discussed were paid directly to a restoration account and then distributed among the three original partnerships; whereby the three original partnerships recorded the recoveries as income. After the recovery level of $4,500,000 was exceeded, fifty percent of the total disposition fee amount paid to the three original partnerships recovery through the restoration account (in lieu of the disposition fee escrow) was refunded to TPG during March 1996. The remaining fifty percent amount allocated to the Partnership through the restoration account, and which was previously reflected as Partnership recovery income, may be owed to TPG if the $6,000,000 recovery level is met. As of September 30, 2019, the Partnership may owe TPG $16,296 if the $6,000,000 recovery level is achieved. TPG does not expect any future refund, as it is uncertain that such a $6,000,000 recovery level will be achieved. |
Amount of recovery of funds | $ 4,500,000 |
Payable fee on achieving recovery level | 16,296 |
Aggregate recovery of funds value | $ 6,000,000 |
PMA Indemnification Trust (Deta
PMA Indemnification Trust (Details Narrative) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Banking and Thrift [Abstract] | |
Reserve related to partnership assets | $ 250,000 |
Earnings credited to the trust | $ 225,574 |