Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 07, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | DIVALL INSURED INCOME PROPERTIES 2 LIMITED PARTNERSHIP | |
Entity Central Index Key | 0000825788 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
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 Shell Company | false | |
Entity Common Stock, Shares Outstanding | 0 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
INVESTMENT PROPERTIES: (Note 3) | ||
Land | $ 2,794,122 | $ 2,794,122 |
Buildings | 4,017,412 | 4,017,412 |
Accumulated depreciation | (3,958,413) | (3,897,848) |
Net investment properties | 2,853,121 | 2,913,686 |
OTHER ASSETS: | ||
Cash | 127,666 | 39,221 |
Cash held in Indemnification Trust (Note 7 ) | 479,436 | 475,574 |
Security deposits escrow | 64,348 | 69,464 |
Rents and other receivables | 238,417 | 678,323 |
Deferred tenant award proceeds escrow | 31,413 | 42,343 |
Prepaid insurance | 1,993 | 4,982 |
Deferred charges, net | 185,011 | 198,809 |
Total other assets | 1,128,284 | 1,508,716 |
Total assets | 3,981,405 | 4,422,402 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 9,851 | 30,301 |
Due to General Partner (Note 5) | 787 | 1,345 |
Deferred rent | 23,596 | 23,596 |
Security deposits | 64,340 | 69,340 |
Total current liabilities | 98,574 | 124,582 |
LONG TERM LIABILITIES: | ||
Deferred rent | 5,667 | 16,640 |
Total long term liabilities | 5,667 | 16,640 |
CONTINGENCIES AND COMMITMENTS (Notes 6 and 7) | ||
General Partner - | ||
Cumulative net income (retained earnings) | 378,772 | 376,804 |
Cumulative cash distributions | (156,832) | (156,045) |
Total general partners' capital | 221,940 | 220,759 |
Limited Partners (46,280.3 interests outstanding at June 30, 2020 and December 31, 2019) | ||
Capital contributions | 46,280,300 | 46,280,300 |
Offering Costs | (6,921,832) | (6,921,832) |
Cumulative net income (retained earnings) | 43,864,253 | 43,669,450 |
Cumulative cash distributions | (78,727,268) | (78,127,268) |
Total limited partners' capital | 4,495,453 | 4,900,650 |
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 | 3,877,164 | 4,281,180 |
Total liabilities and partners' capital | $ 3,981,405 | $ 4,422,402 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - shares | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 |
Statement of Financial Position [Abstract] | |||
Limited partners, interests outstanding | 46,280.3 | 46,280.3 | 46,280.3 |
Condensed Statements of Income
Condensed Statements of Income (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
OPERATING REVENUES: | ||||
Rental income (Note 3) | $ 382,504 | $ 320,578 | $ 602,275 | $ 525,673 |
TOTAL OPERATING REVENUES | 382,504 | 320,578 | 602,275 | 525,673 |
EXPENSES: | ||||
Partnership management fees (Note 5) | 72,075 | 70,794 | 143,296 | 140,464 |
Insurance | 1,452 | 1,466 | 2,947 | 2,931 |
General and administrative | 15,425 | 6,440 | 47,476 | 19,143 |
Advisory Board fees and expenses | 1,750 | 2,625 | 3,500 | 4,750 |
Professional services | 32,845 | 52,758 | 137,964 | 148,651 |
Other Property Expenses | (89) | |||
Depreciation | 30,282 | 30,282 | 60,564 | 60,565 |
Amortization | 6,899 | 6,606 | 13,798 | 12,625 |
TOTAL OPERATING EXPENSES | 160,728 | 170,971 | 409,545 | 389,040 |
OTHER INCOME | ||||
Other miscellaneous income | 5,000 | |||
Other interest income | 3,921 | 140 | 4,041 | 5,657 |
TOTAL OTHER INCOME | 3,921 | 140 | 4,041 | 10,657 |
NET INCOME | 225,697 | 149,747 | 196,771 | 147,290 |
NET INCOME ALLOCATED - GENERAL PARTNER | 2,257 | 1,497 | 1,968 | 1,473 |
NET INCOME ALLOCATED - LIMITED PARTNERS | $ 223,440 | $ 148,250 | $ 194,803 | $ 145,817 |
Based on 46,280.3 interests outstanding: (Basic and diluted) | ||||
NET INCOME PER LIMITED PARTNERSHIP INTEREST | $ 4.83 | $ 3.2 | $ 4.21 | $ 3.15 |
Condensed Statements of Incom_2
Condensed Statements of Income (Unaudited) (Parenthetical) - shares | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 |
Income Statement [Abstract] | |||
Limited partners capital account, interests outstanding | 46,280.3 | 46,280.3 | 46,280.3 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income from continuing operations | $ 196,771 | $ 147,290 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Depreciation and amortization | 74,363 | 73,190 |
Changes in operating assets and liabilities | ||
Decrease in rents and other receivables | 461,678 | 425,200 |
Increase in long-term rent receivable | (21,772) | (7,338) |
Decrease in security deposit escrow | 5,116 | 5,285 |
Increase in due from WendGusta, LLC | (8,100) | |
Decrease in utility deposit | 6,530 | |
Decrease in deferred rent award escrow | (43) | (144) |
Decrease in prepaid insurance | 2,989 | 3,179 |
Increase (Decrease) in accounts payable and accrued expenses | (20,450) | 4,987 |
Payment of leasing commission | (38,716) | |
Security deposit refund | (5,000) | (5,000) |
Decrease in due to General Partner | (558) | (409) |
Net cash from operating activities | 693,094 | 605,954 |
CASH FLOWS USED IN INVESTING ACTIVITIES: | ||
Cash interest applied to Indemnification Trust account | (3,862) | (5,350) |
Net cash used in investing activities | (3,862) | (5,350) |
CASH FLOWS USED IN FINANCING ACTIVITIES: | ||
Cash distributions to Limited Partners | (600,000) | (600,000) |
Cash distributions to General Partner | (787) | (589) |
Net cash used in financing activities | (600,787) | (600,589) |
NET INCREASE IN CASH | 88,445 | 15 |
CASH AT BEGINNING OF PERIOD | 39,221 | 99,360 |
CASH AT END OF PERIOD | $ 127,666 | $ 99,375 |
Condensed Statements of Partner
Condensed Statements of Partners' Capital - USD ($) | Cumulative Net Income [Member]General Partner [Member] | Cumulative Net Income [Member]Limited Partner [Member] | Cumulative Cash Distributions [Member]General Partner [Member] | Cumulative Cash Distributions [Member]Limited Partner [Member] | Capital Contributions Net of Offering Costs [Member]Limited Partner [Member] | Reallocation [Member]Limited Partner [Member] | General Partner [Member] | Limited Partner [Member] | Total |
Balance, Beginning at Dec. 31, 2018 | $ 368,941 | $ 42,891,026 | $ (152,900) | $ (77,327,268) | $ 39,358,468 | $ (840,229) | $ 216,041 | $ 4,081,997 | $ 4,298,038 |
Net Income (Loss) | (25) | (2,432) | (25) | (2,432) | (2,457) | ||||
Cash Distributions | (500,000) | (500,000) | (500,000) | ||||||
Balance, Ending at Mar. 31, 2019 | 368,916 | 42,888,594 | (152,900) | (77,827,268) | 39,358,468 | (840,229) | 216,016 | 3,579,565 | 3,795,581 |
Balance, Beginning at Dec. 31, 2018 | 368,941 | 42,891,026 | (152,900) | (77,327,268) | 39,358,468 | (840,229) | 216,041 | 4,081,997 | 4,298,038 |
Net Income (Loss) | 147,290 | ||||||||
Balance, Ending at Jun. 30, 2019 | 370,414 | 43,036,843 | (153,489) | (77,927,268) | 39,358,468 | (840,229) | 216,925 | 3,627,814 | 3,844,739 |
Balance, Beginning at Mar. 31, 2019 | 368,916 | 42,888,594 | (152,900) | (77,827,268) | 39,358,468 | (840,229) | 216,016 | 3,579,565 | 3,795,581 |
Net Income (Loss) | 1,498 | 148,249 | 1,498 | 148,249 | 149,747 | ||||
Cash Distributions | (589) | (100,000) | (589) | (100,000) | (100,589) | ||||
Balance, Ending at Jun. 30, 2019 | 370,414 | 43,036,843 | (153,489) | (77,927,268) | 39,358,468 | (840,229) | 216,925 | 3,627,814 | 3,844,739 |
Balance, Beginning at Dec. 31, 2019 | 376,804 | 43,669,450 | (156,045) | (78,127,268) | 39,358,468 | (840,229) | 220,759 | 4,060,421 | 4,281,180 |
Net Income (Loss) | (289) | (28,637) | (289) | (28,637) | (28,926) | ||||
Cash Distributions | (600,000) | (600,000) | (600,000) | ||||||
Balance, Ending at Mar. 31, 2020 | 376,515 | 43,640,813 | (156,045) | (78,727,268) | 39,358,468 | (840,229) | 220,470 | 3,431,784 | 3,652,254 |
Balance, Beginning at Dec. 31, 2019 | 376,804 | 43,669,450 | (156,045) | (78,127,268) | 39,358,468 | (840,229) | 220,759 | 4,060,421 | 4,281,180 |
Net Income (Loss) | 196,771 | ||||||||
Balance, Ending at Jun. 30, 2020 | 378,772 | 43,864,253 | (156,832) | (78,727,268) | 39,358,468 | (840,229) | 221,940 | 3,655,224 | 3,877,164 |
Balance, Beginning at Mar. 31, 2020 | 376,515 | 43,640,813 | (156,045) | (78,727,268) | 39,358,468 | (840,229) | 220,470 | 3,431,784 | 3,652,254 |
Net Income (Loss) | 2,257 | 223,440 | 2,257 | 223,440 | 225,697 | ||||
Cash Distributions | (787) | (787) | (787) | ||||||
Balance, Ending at Jun. 30, 2020 | $ 378,772 | $ 43,864,253 | $ (156,832) | $ (78,727,268) | $ 39,358,468 | $ (840,229) | $ 221,940 | $ 3,655,224 | $ 3,877,164 |
Condensed Statements of Partn_2
Condensed Statements of Partners' Capital (Parenthetical) - $ / shares | 3 Months Ended | ||
Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | |
Statement of Partners' Capital [Abstract] | |||
Cash distributions per limited partnership interest | $ 12.96 | $ 2.16 | $ 10.80 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [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 June 30, 2020, the Partnership owned 10 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. During the third quarter of 2020, the Partnership will circulate a consent solicitation to the Partnership’s limited partners which, if approved by the limited partners, will extend the term of the Partnership through November 30, 2030. An 8-k will be filed with the results of the consent solicitation in mid to late September 2020. |
Recently Issued Accounting Prin
Recently Issued Accounting Principles | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Issued Accounting Principles | 2. RECENTLY ISSUED ACCOUNTING PRINCIPLES: Changes to US GAAP are established by the FASB in the form of ASU’s to the FASB’s Accounting Standards Codification. The Partnership considers the applicability and impact of all ASU’s. The FASB has not recently issued any ASU’s that the Partnership expect to be applicable and have a material impact on its financial statements. |
Investment Properties
Investment Properties | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020, 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. On April 23, 2020, the Partnership executed three Amended and Restated Restaurant Absolutely Net Leases to the Original Leases dated January 30, 1989, by and between the Partnership and Wendgusta LLC (“Tenant”, as successor in interest to Wensouth Corporation) with the intent that these Leases will amend, restate and replace the Original Leases. Effective January 1, 2021, for the restaurant property located at 1901 Whiskey Road, Aiken, South Carolina, per the terms of the Amendment, the Tenant will pay $210,632 annually in rent, in addition to 7% of sales over an annual breakpoint of $2,632,900 over the term of the lease extension (January 1, 2021 to December 31, 2040). Effective January 1, 2021, for the restaurant property located at 1004 Richland Ave, Aiken, South Carolina, per the terms of the Amendment, the Tenant will pay $167,500 annually in rent, in addition to 7% of sales over an annual breakpoint of $2,093,750 over the term of the lease extension (January 1, 2021 to December 31, 2040). Effective January 1, 2021, for the restaurant property located at 3013 Peach Orchard Road, Augusta, Georgia per the terms of the Amendment, the Tenant will pay $188,000 annually in rent, in addition to 7% of sales over an annual breakpoint of $2,350,000 over the term of the lease extension (January 1, 2021 to December 31, 2040). On April 28, 2020, the Partnership executed a Third Amendment to Lease with RMH Franchise Corporation in response to changed circumstances arising from the COVID-19 pandemic. The term of the amendment is April 1, 2020 through June 30, 2020 and during that time suspends the amount and timing of the payment of the monthly base rent, as defined in the Lease. The revised monthly base rent for the months of April and May 2020 is equal to six percent of the monthly gross sales. The revised monthly base rent for the month of June 2020 is a fixed amount of $5,750. Full monthly base rent resumes July 1, 2020. |
Partnership Agreement
Partnership Agreement | 6 Months Ended |
Jun. 30, 2020 | |
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 | 6 Months Ended |
Jun. 30, 2020 | |
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, 2020, the minimum annual Base Fee and the maximum Expenses reimbursement increased by 1.81% from the prior year, which represents the allowable annual Consumer Price Index adjustment per the PMA. Therefore, as of March 1, 2020, the minimum annual Base Fee paid by the Partnership was raised to $288,300 and the maximum annual Expenses reimbursement was increased to $23,256. 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 six month periods ended June 30, 2020 and 2019 are as follows: Incurred for the Incurred for the Incurred for the Incurred for the Three Months Ended Three Months Ended Six Months Ended Six Months Ended 30-Jun-20 30-Jun-19 30-Jun-20 30-Jun-19 (unaudited) (unaudited) (unaudited) (unaudited) General Partner Management fees $ 72,075 $ 70,794 $ 143,296 $ 140,464 Overhead allowance 5,814 5,712 11,560 11,334 Leasing commissions - 6,453 - 12,906 Reimbursement for out-of-pocket expenses - - 2,500 2,500 Cash distribution 787 589 787 589 $ 78,676 $ 83,548 $ 158,143 $ 167,793 At June 30, 2020 and December 31, 2019, $787 and $1,345, respectively, was payable to the General Partner. As of June 30, 2020, 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 six month periods ended June 30, 2020 and 2019 are as follows: Three Month Period ended June 30, 2020 Three Month Period ended June 30, 2019 Six Month Period ended June 30, 2020 Six Month Period ended June 30, 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Advisory Board Fees paid $ 875 $ 875 $ 1,750 $ 1,750 At June 30, 2020 and December 31, 2019 there were no outstanding Advisory Board fees accrued and payable to Jesse Small. |
Contingent Liabilities
Contingent Liabilities | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020, 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 | 6 Months Ended |
Jun. 30, 2020 | |
Banking and Thrift, Other Disclosures [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 (see Note 8). In addition, $229,436 of earnings has been credited to the Trust as of June 30, 2020. 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. |
Fair Value Disclosures
Fair Value Disclosures | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures | 8. FAIR VALUE DISCLOSURES: The Partnership has determined the fair value based on hierarchy that gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy under the accounting principle are described below: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Quoted prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active, and inputs other than quoted prices that are observable for the investment. Level 3 Unobservable inputs for which there is little, if any, market activity for the investment. The inputs into the determination of fair value are based upon the best information in the circumstances and may require significant management judgment or estimation and the use of discounted cash flow models to value the investment. The fair value hierarchy is based on the lowest level of input that is significant to the fair value measurements. The Partnership’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. The Partnership assesses the levels of the investments at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer in accordance with the Partnership’s accounting policy regarding the recognition of transfers between levels of the fair value hierarchy. For the six-month period ended June 30, 2020 and for the year ended December 31, 2019, there were no such transfers. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 9. SUBSEQUENT EVENTS: Wendy’s lease amendments On July 27, 2020, the Partnership filed an 8-k reporting the extension of two Wendcharles I, LLC property leases and one Wendcharles II, LLC property lease through December 31, 2040. Consent Solicitation On July 30, 2020, the Partnership filed its preliminary consent solicitation with the SEC in which it is requesting a vote of the partners to extend the expiration of the partnership agreement from November 30, 2020 to November 30, 2030. Coronavirus Outbreak During the first quarter of 2020, there was a global outbreak of a new strain of coronavirus, COVID-19 which continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. The global impact of the outbreak has been rapidly evolving, and as cases of the virus have continued to be identified in additional countries, many countries have reacted by instituting quarantines, placing restrictions on travel, and limiting hours of operations of non-essential offices and retail centers. Such actions are creating disruption in global supply chains, and adversely impacting a number of industries, such as retail, restaurants and transportation. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of the coronavirus. Nevertheless, the coronavirus presents material uncertainty and risk with respect to the Company’s performance and financial results, such as the potential negative impact to the tenants of its properties, the potential closure of certain of its properties, increased costs of operations, decrease in values of its properties, changes in law and/or regulation, and uncertainty regarding government and regulatory policy. Up to the date of this filing, the Company has not received modification rent requests from any tenant except as disclosed in Note 3. All rent has been paid in full by each tenant. |
Transactions with General Par_2
Transactions with General Partner and its Affiliates (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 six month periods ended June 30, 2020 and 2019 are as follows: Incurred for the Incurred for the Incurred for the Incurred for the Three Months Ended Three Months Ended Six Months Ended Six Months Ended 30-Jun-20 30-Jun-19 30-Jun-20 30-Jun-19 (unaudited) (unaudited) (unaudited) (unaudited) General Partner Management fees $ 72,075 $ 70,794 $ 143,296 $ 140,464 Overhead allowance 5,814 5,712 11,560 11,334 Leasing commissions - 6,453 - 12,906 Reimbursement for out-of-pocket expenses - - 2,500 2,500 Cash distribution 787 589 787 589 $ 78,676 $ 83,548 $ 158,143 $ 167,793 |
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 six month periods ended June 30, 2020 and 2019 are as follows: Three Month Period ended June 30, 2020 Three Month Period ended June 30, 2019 Six Month Period ended June 30, 2020 Six Month Period ended June 30, 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Advisory Board Fees paid $ 875 $ 875 $ 1,750 $ 1,750 |
Organization (Details Narrative
Organization (Details Narrative) | Feb. 22, 1990USD ($)shares | Dec. 31, 1987USD ($) | Jun. 30, 2020Number |
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) | May 31, 2020 | Apr. 30, 2020 | Apr. 23, 2020USD ($) | Jun. 30, 2020USD ($)RestaurantNumber |
Property leased to fully constructed fast-food restaurants | Number | 10 | |||
Location of properties | Number | 3 | |||
Wensouth Corporation [Member] | 1901 Whiskey Road Aiken South Carolina [Member] | ||||
Rent payments | $ 210,632 | |||
Annual sale over percentage | 7.00% | |||
Annual breakpoint lease amount | $ 2,632,900 | |||
Lease extension description | (January 1, 2021 to December 31, 2040) | |||
Wensouth Corporation [Member] | 1004 Richland Ave Aiken South Carolina [Member] | ||||
Rent payments | $ 167,500 | |||
Annual sale over percentage | 7.00% | |||
Annual breakpoint lease amount | $ 2,093,750 | |||
Lease extension description | (January 1, 2021 to December 31, 2040) | |||
Wensouth Corporation [Member] | 3013 Peach Orchard Road Augusta Georgia [Member] | ||||
Rent payments | $ 188,000 | |||
Annual sale over percentage | 7.00% | |||
Annual breakpoint lease amount | $ 2,350,000 | |||
Lease extension description | (January 1, 2021 to December 31, 2040) | |||
RMH Franchise Corporation [Member] | ||||
Rent payments | $ 5,750 | |||
Lease gross sale percentage description | 6.00% | 6.00% | ||
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) | Jun. 30, 2020 |
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, 2020 | Jan. 02, 2019 | Jun. 30, 2020 | Dec. 31, 2019 |
Payable to general partner | $ 787 | $ 1,345 | ||
Outstanding advisory board fees | ||||
Permanent Manager Agreement [Member] | ||||
Percentage of base fee on gross receipts | 4.00% | |||
Maximum reimbursement on office rent and related expenses | $ 288,300 | $ 13,250 | ||
Percentage of increase in base fee and expenses reimbursement | 1.81% | |||
Fees received from partnership, by general partner | $ 23,256 |
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 | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Related Party Transactions [Abstract] | ||||
Management fees | $ 72,075 | $ 70,794 | $ 143,296 | $ 140,464 |
Overhead allowance | 5,814 | 5,712 | 11,560 | 11,334 |
Leasing commissions | 6,453 | 12,906 | ||
Reimbursement for out-of-pocket expenses | 2,500 | 2,500 | ||
Cash distribution | 787 | 589 | 787 | 589 |
Total general partner expense | $ 78,676 | $ 83,548 | $ 158,143 | $ 167,793 |
Transactions with Owners with G
Transactions with Owners with Greater than Ten Percent Beneficial Interests - Schedule of Advisory Board Fees Paid to Jesse Small (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Jesse Small [Member] | ||||
Advisory Board Fees paid | $ 875 | $ 875 | $ 1,750 | $ 1,750 |
Contingent Liabilities (Details
Contingent Liabilities (Details Narrative) | 6 Months Ended |
Jun. 30, 2020USD ($)Number | |
Commitments and Contingencies Disclosure [Abstract] | |
Maximum percentage of disposition fees on sale of partnership properties | 3.00% |
Number of partnership properties for sale | Number | 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 June 30, 2020, the Partnership may owe TPG $16,296 if the $6,000,000 recovery level is 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) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Banking and Thrift, Other Disclosures [Abstract] | |
Reserve related to partnership assets | $ 250,000 |
Earnings credited to the trust | $ 229,436 |
Fair Value Disclosures (Details
Fair Value Disclosures (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | ||
Recognition of transfers between levels of the fair value hierarchy |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] | Jul. 30, 2020 | Jul. 27, 2020 |
Partnership Agreement [Member] | ||
Extend partnership agreement description | November 30, 2020 to November 30, 2030. | |
Wendys Lease Amendments [Member] | ||
Lease description | The extension of two Wendcharles I, LLC property leases and one Wendcharles II, LLC property lease through December 31, 2040. | |
Lease expairese date | Dec. 31, 2040 |