1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT UNDER SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended: Commission File Number: DECEMBER 31, 1996 33-2320 - -------------------------- ----------------------- EXCEL PROPERTIES, LTD. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) CALIFORNIA 87-0426335 - ------------------------------- ---------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 16955 VIA DEL CAMPO, SUITE 110 SAN DIEGO, CALIFORNIA 92127 - -------------------------------------------------------------------------------- (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (619) 485-9400 -------------- Securities registered pursuant to Section 12(b) of the Act: NONE ---- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (1) Yes X No ----- ----- (1) Yes X No ----- ----- 2 PART I ITEM 1. DESCRIPTION OF BUSINESS Excel Properties, Ltd., a California limited partnership (the "Partnership"), was organized to purchase commercial real estate properties for cash and to hold these assets for investment. The general partners of the Partnership are Excel Realty Trust, Inc., a Maryland corporation, and Gary B. Sabin, an individual. The Partnership was formed on September 19, 1985 and will continue in existence until December 31, 2015, unless dissolved earlier under certain circumstances. Properties that have been acquired by the Partnership are subject to long-term triple-net leases. Such leases require the lessee to pay the prescribed minimum rental plus all costs and expenses associated with the operations and maintenance of the property. These expenses include real property taxes, property insurance, repairs and maintenance and similar expenses. The net effect is that, under normal circumstances, no expenses will offset the rental revenue from the property. Most of the leases also provide some form of inflation hedge which calls for the minimum rent to be increased, based upon adjustments in the consumer price index, fixed rent escalation, or by a percentage of the gross sales of the tenant. Properties have been acquired free and clear of liens and encumbrances. The Partnership may seek to finance one or more of the properties and distribute the financing proceeds to the partners, but only if the financing proceeds equal or exceed 100% of the Partnership's capital invested in the property or properties (including a prorata amount of the Partnership's public offering unit selling commissions and organization expenses). To date, no properties owned by the Partnership have been the subject of any mortgage financing, therefore, at the present time, all properties remain free and clear from any mortgage loan, lien or encumbrance. The principal investment objectives of the Partnership are to provide to its limited partners: (1) preservation, protection and eventual return of the investment, (2) distributions of cash from operations, some of which may be a return of capital for tax purposes rather than taxable income, (3) distributions of cash from financing the properties and (4) realization of long-term appreciation in value of properties. The general partners have selected properties they believe meet certain minimum investment standards and that are most likely to accomplish the investment objectives of the Partnership. Properties were acquired through arms-length negotiations with third parties. ITEM 2. PROPERTIES The Partnership presently owns sixteen properties as follows: KINDER-CARE LEARNING CENTERS The Partnership owns seven properties on lease to Kinder-Care, Inc., the nation's largest provider of day-care centers. KINDER-CARE LEARNING CENTER - GAHANNA, OHIO Date of purchase: May 28, 1987 Purchase price: $216,823 Property description: This property is located approximately fifteen miles northeast of Columbus, Ohio in the suburb of Gahanna. The building is located on .551 acres and contains 4,528 square feet. The current lease expires June 30, 1998 with gross rents of $21,000 per year. 2 3 KINDER-CARE LEARNING CENTER - GROVE CITY, OHIO Date of purchase: May 28, 1987 Purchase price: $222,340 Property description: This property is located in Grove City, Ohio, seven miles south of Columbus, Ohio. The building is located on .8939 acres and contains 4,528 square feet. The current lease expires November 30, 1998 with gross rents of $21,000 per year. KINDER-CARE LEARNING CENTER - WEST CARROLLTON, OHIO Date of purchase: May 28, 1987 Purchase price: $190,337 Property description: This property is located approximately eight miles southwest of Dayton, Ohio in the suburb of West Carrollton. The building contains 4,650 square feet and is situated on .55 acres of land. The current lease expires December 31, 2001. The annual rent over the remainder of the lease is as follows: January 1, 1997 to December 31, 1998 $ 33,202 January 1, 1999 to December 31, 2001 $ 35,526 KINDER-CARE LEARNING CENTER - COLUMBUS, OHIO Date of purchase: May 28, 1987 Purchase price: $190,337 Property description: This property is located in Columbus, Ohio. The building is situated on .538 acres and contains 4,650 square feet. The property has been sublet by Kinder-Care to Children Today, another child-care provider. The property is on lease until December 31, 2001. The annual rent over the remainder of the lease is as follows: January 1, 1997 to December 31, 1998 $ 33,202 January 1, 1999 to December 31, 2001 $ 35,526 KINDER-CARE LEARNING CENTER - DAYTON, OHIO Date of purchase: May 28, 1987 Purchase price: $190,337 Property description: This property is located approximately thirty miles northeast of Dayton, Ohio in the Mud River Township. The building is situated on .645 acres and contains 4,650 square feet. The current lease expires December 31, 2001. The annual base rent over the remaining term of the lease is as follows: January 1, 1997 to December 31, 1998 $ 33,202 January 1, 1999 to December 31, 2001 $ 35,526 3 4 KINDER-CARE LEARNING CENTER - INDIANAPOLIS, INDIANA Date of purchase: May 2, 1989 Purchase price: $201,080 Property description: This property is located at 1034 N. Whitcomb Ave. in Indianapolis, Indiana. The building contains 4,487 square feet and is situated on .598 acres. The current lease expires December 31, 2000 with gross rents of $49,694 per year. KINDER-CARE LEARNING CENTER - INDIANAPOLIS, INDIANA Date of purchase: May 2, 1989 Purchase price: $201,079 Property description: This property is located at 29 N. Coronado in Indianapolis, Indiana. The building contains 4,487 square feet and is situated on 1.106 acres. The gross rents are $21,600 per year and the lease expires December 31, 2000. PARAGON RESTAURANT GROUP, INC. The Partnership owns two properties operated as Mountain Jack's Restaurants, on lease to Paragon Steakhouse Restaurants, Inc. The company, headquartered in San Diego, California, is one of the nation's premier specialty restaurant chain operators. Their trade names include Mountain Jacks's and Hungry Hunter. MOUNTAIN JACK'S RESTAURANT - MIDDLEBURG HEIGHTS, OHIO Date of purchase: July 21, 1987 Purchase price: $1,046,222 Property description: The property, situated on 1.72 acres and containing 6,331 square feet, is an upscale steak and seafood restaurant located in Middleburg Heights, Ohio, a suburb of Cleveland. It has seating for approximately 163 persons and parking for approximately 115 cars. The annual lease payment is the greater of $104,500 or 5% of the gross sales. The lease expires on July 20, 2005. MOUNTAIN JACK'S RESTAURANT - LAFAYETTE, INDIANA Date of purchase: September 29, 1987 Purchase price: $1,080,096 Property description: This property is located at 2411 State Road 26 East, Lafayette, Indiana. Lafayette is strategically located between Chicago, Illinois to the north and Indianapolis, Indiana to the south. It is the home of Purdue University. The property is situated on 1.72 acres, contains 8,274 gross square feet and has seating for approximately 294 persons. The site is ideally located along a main commercial artery and is surrounded by seven hotels. The annual lease payment is the greater of $107,800 or 5% of the gross sales. The lease expires on September 28, 2005. 4 5 AUTOWORKS - BELLEVUE, NEBRASKA Date of purchase: July 5, 1988 Purchase price: $688,580 Property description: The property is located at a major shopping center at 915 Fort Crook Road, Bellevue, Nebraska, a suburb of Omaha, Nebraska. Bellevue is the home of the Strategic Air Command (SAC) which contributes largely to the area economy. The improvements consist of a free standing concrete block and glass building containing 4,870 square feet. The base minimum annual rent is $80,484 per year with scheduled rental increases occurring every third year of the lease based on increases in the Consumer Price Index not to exceed a 10% increase. The lease expires on July 5, 2008. PONDEROSA RESTAURANT - ANN ARBOR, MICHIGAN Date of purchase: January 20, 1989 Purchase price: $759,618 Property description: The property, containing 5,034 square feet, is situated on approximately one acre located at 3354 East Washtenaw Street, Ann Arbor, Michigan. The property is surrounded by numerous commercial enterprises including the Arbor Land enclosed shopping mall. The lease calls for a minimum rent of $77,187 plus 6.5% of the annual gross sales in excess of the average annual sales for the years 1989 and 1990. The lease expires September 21, 2003. PONDEROSA RESTAURANT - ALTON, ILLINOIS Date of purchase: January 31, 1989 Purchase price: $770,993 Description of property: The building, containing 5,587 square feet, is situated on approximately one acre at 3354 Homer-Adams Parkway along Highway 111, which is the major east/west road system through the city. Alton, Illinois is situated across the Mississippi River from St. Louis, Missouri. The tenant has vacated the premises and the Partnership is attempting to re-lease and/or sell this property. Rent is $93,813 per year. Although the Partnership is attempting to collect amounts owed, the rents are being reserved for in bad debts. The Partnership received $153,386 in insurance proceeds related to fire damage that occurred in 1996. These proceeds have been offset against the price of the property. PAYLESS SHOE STORE - PLANT CITY, FLORIDA Date of purchase: December 1, 1989 Purchase price: $648,122 Property description: The property is located at 1801 Jim Redman Parkway, Plant City, Florida. Plant City is located approximately 18 miles northeast of the central business district of Tampa, Florida. The property is situated on .89 acres and contains 2,989 square feet. The lease is guaranteed by the May Department Store Co. which has a net worth in excess of $3 billion. The property is on lease until November 30, 1999 with four additional 5-year options. The minimum rent is $70,785 per year. The rent would be $82,682, $94,578, $106,495 and $118,372 for each option period should the options be exercised by the tenant. 5 6 TIMBER LODGE STEAKHOUSE - BURNSVILLE, MINNESOTA Date of purchase: February 12, 1990 Purchase price: $722,040 Property description: This family restaurant is located at 13050 Aldrich Avenue South. Burnsville is a suburb approximately 11 miles south of Minneapolis. The property contains 6,614 square feet and is situated on 1.43 acres. The current rent is $69,031 per year and the lease expires on July 14, 2001. TODDLE HOUSE RESTAURANT - KENNER, LOUISIANA Date of purchase: November 26, 1991 Purchase price: $218,738 Property description: Toddle House Restaurants is a national restaurant chain. It features 24-hour service with a cook-to-order menu. Toddle House Restaurants, Inc. is a wholly-owned subsidiary of Diversified Hospitality Group, Inc. (DHG) which also operates the Steak 'N' Eggs Kitchen restaurants. The property is located at 2,841 Loyola, Kenner, Louisiana and contains 2,175 square feet. The land on which the restaurant is located is 16,800 square feet. The current annual rent is $38,020 and the lease expires on November 25, 2011. Toddle House is currently in Chapter 11 Bankruptcy and did not pay any rent in 1996. The Partnership is attempting to re-lease or sell this property. LAND - LAS VEGAS, NEVADA Date of purchase: March 9, 1995 Purchase price: $128,800 Property description: A 39% undivided interest in a parcel of land located on Sahara Avenue in Las Vegas, Nevada. The land is not currently generating any rental income. The parcel is currently being held for sale. ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 5. MARKET FOR REGISTRANT'S LIMITED PARTNERSHIP UNITS AND RELATED SECURITY HOLDER MATTERS A) A public market for the Partnership's units does not exist and is not likely to develop. B) As of December 31, 1996, there were 1,648 investors holding 135,299 units. C) The Partnership made its first cash flow distribution from operations in May 1987. Since that date, consistent cash distributions have been made at the end of each calendar quarter through December 31, 1996. The Partnership expects to continue to make cash distributions on a quarterly basis in the future. 6 7 PART II ITEM 6. SELECTED FINANCIAL DATA The following information has been selected from the financial statements of the Partnership: INCOME STATEMENT DATA 1996 1995 1994 1993 1992 ---------- ----------- ------------ ----------- ----------- Total rental revenue $1,048,015 $ 1,185,371 $ 1,145,656 $ 1,226,545 $ 1,225,912 Interest and other income 202,786 129,399 112,772 41,354 25,550 Operating expenses: Property expenses 214,221 63,761 (2,438) 56,091 57,054 General and administrative 59,106 36,972 43,955 50,845 51,119 Depreciation 176,133 193,696 212,716 227,306 230,087 Net income before real estate sales 801,341 1,020,341 1,004,195 937,162 913,476 Gain (loss) on sale of real estate 880,643 450,293 - 273,251 (17,325) Net income 1,681,984 1,470,634 1,004,195 1,210,413 896,151 Per Unit Data: Net income 12.07 10.77 7.33 8.82 6.52 Distributions 25.10 8.50 8.90 8.37 8.16 BALANCE SHEET DATA Net real estate 6,213,838 8,414,719 9,451,413 9,664,128 10,649,877 Cash 1,393,367 1,817,201 641,053 626,726 483,003 Accounts receivable, net 79,217 165,083 19,135 44,029 15,369 Total assets 9,665,303 11,417,867 11,138,851 11,367,996 11,303,070 Total liabilities 45,898 50,213 79,274 61,722 57,588 Partners' equity 9,619,405 11,367,654 11,059,577 11,306,274 11,245,482 7 8 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following discussion should be read in conjunction with the financial statements and the notes thereto. Historical results and percentage relationships set forth in the Statements of Income contained in the Financial Statements, including trends which might appear, should not be taken as indicative of future operations. Comparison of year ended December 31, 1996 to year ended December 31, 1995. The net income of the Partnership increased by $211,350 in 1996 when compared to 1995. The differences in income and expenses are explained below. Rental revenue decreased by $137,356, or 11.6% to $1,048,015 in 1996 from $1,185,371 in 1995. During 1996, the Company sold four operating properties which accounted for the decrease. These properties accounted for $190,551 of rental revenue in 1996 compared to $258,273 in 1995, a decrease of $67,722. Also, a building and a land parcel that were sold in 1995, had contributed $129,669 to 1995 rental revenues. The lost rental revenue from properties sold was offset partially by additional rental revenue from rent increases from existing tenants. Interest income increased by $73,387 in 1996 from 1995. This increase was due to the additional amounts of cash on hand which the Partnership invested in interest bearing accounts. Operating expenses increased by $155,031 in 1996 from 1995. The net increase was primarily attributed to the $132,991 increase in bad debt expense, the $21,455 increase in accounting and legal expense, the $17,962 increase in property taxes, and the decrease of $17,563 in depreciation. The bad debt expense for 1996 was $183,608 of which $100,067 was attributable to a building leased to Ponderosa Restaurant but vacant and $81,488 to the nonpayment of rent by Toddle House Restaurants. Bad debt expense was $50,617 in 1995. Legal expense increased primarily due to collection efforts on amounts owed to the Partnership from Ponderosa. Property tax expense of $17,962 incurred in 1996 related to the building leased to Ponderosa. The decrease in depreciation in 1996 was primarily related to the four properties sold during the year. During 1996, the Partnership sold four properties and a parcel of land. In April 1996, the Partnership sold a Kentucky Fried Chicken building and a Wendy's building located in Blaine, Minnesota for $901,187. The Partnership recognized a net gain of $206,761 on these sales. In October 1996, the partnership sold a building that was leased to Checker Autoworks in Denver, Colorado for $811,494 of which the Partnership recognized a $208,072 gain. Also in October 1996, the Partnership sold a land parcel for $75,357 and recognized a $9,004 gain. The land parcel was located in Las Vegas, Nevada. Finally, in December 1996, the Partnership sold a building leased to Denny's Restaurant and located in Denver, Colorado for $963,968 and recognized a $456,806 gain. Based on current leases in place, management believes that the operating revenues and related expenses of the Partnership in 1996 should be somewhat indicative of the operations of the Partnership in 1997 (less $190,551 of revenue and $26,557 of expenses related to the properties sold in 1996). Various factors may, however, influence 1997 operations. These may include such events as additional property sales, tenants who default on leases or new tenants obtained by the Partnership to lease vacant properties. The Partnership has continued to make distributions to the limited partners at an annual rate of over 8% since 1989. In 1996, distributions at a rate of approximately 25% were made primarily from cash received through property sales, in addition to cash generated from operations. Management anticipates that distributions will approximate 8% in 1997 which may be supplemented by excess proceeds distributed from property sales, if any. If additional properties are sold and proceeds are distributed to the partners instead of reinvested, recurring distributions are expected to decrease in the future. 8 9 Inflation is not expected to negatively impact the operations of the Partnership due to the structure of its investment portfolio. The leases all provide a minimum rental which the lessee is obligated to pay. Additionally, most leases contain some form of inflation hedge which provides for the rent to be increased. The rent increases may be in the form of scheduled fixed minimum rent increases, Consumer Price Index (CPI) adjustments or by participating in a percentage of the gross sales volume of the tenant. Since the triple-net leases require the lessees to pay for all property operating expenses, the net effect is that the revenue received will not be eroded away as operating expenses increase due to inflation. Comparison of year ended December 31, 1995 to year ended December 31, 1994. The net income of the Partnership increased by $466,439 in 1995 when compared to 1994. The differences in income and expenses are explained below. Rental revenue increased by $48,348 in 1995 from 1994. In February 1995, the Partnership sold the Childrens World building that generated $109,000 of gross rental income in 1994 but only $14,223 in 1995. In 1995, the Partnership also purchased a parcel of land in March and sold the same parcel in November. While the land was owned in 1995, the Partnership collected $115,446 in base rent. The additional rental revenue came from rent increases from existing tenants. Interest income increased by $16,627 in 1995 from 1994. This increase was due to the additional amounts of cash on hand which the Partnership invested in interest bearing accounts. Operating expenses increased by $40,196 from 1994 to 1995. The net increase was primarily attributed to the $67,257 increase in bad debt expense, the decrease of $19,020 in depreciation expense and the decrease of $6,386 in accounting and legal expense. The bad debt expense increased $50,031 due to the nonpayment of rent by Toddle House Restaurants in 1995 and by $16,640 from the negative bad debt expense in 1994. Depreciation expense decreased primarily from a building that was sold during the year. Legal expense decreased due to expenditures made in 1994 that were not made in 1995 related to collection of Toddle House rent amounts. In February 1995, the Partnership sold a building in Phoenix, Arizona that was on lease to Childrens World. The sales price was $1,135,000 less $28,729 in selling expenses. The Partnership recognized a $99,141 gain on the sale. In November 1995, the Partnership sold for $1,566,264, part of the ground that had been purchased in February 1995. Prior to the Partnership's acquisition, there were no operations relating to this ground. The Partnership recognized a $351,152 gain on the sale. In 1994, there were no sales of real estate. LIQUIDITY The Partnership has $1,393,367 in cash at December 31, 1996, with no outstanding debt on any of the properties that it owns. As such, management does not anticipate any liquidity difficulties at this time. The Partnership made a quarterly cash distribution of $1,000,000 in January 1997, which included cash that had accumulated during the fourth quarter of 1996 from operating income and proceeds from a property sale in October 1996. After the distributions, the Partnership still had approximately $393,367 in cash reserves to pay any unexpected liabilities. Additionally, there was $963,968 in an escrow account which the Partnership received in February 1997. The Partnership has no debt and currently has income of approximately $79,000 per month from rental income which management anticipates would cover expenses which might need to be paid. However, the Partnership does not expect to use significant funds for operational expenses as the properties are leased on a triple-net lease basis. The Partnership's primary source of cash in 1997 is expected to continue to come from the rental of the real estate properties currently owned. Management expects that rental income will be sufficient to cover the operating expenses of the Partnership and allow for cash distributions to be made to the limited partners. The Partnership has the policy of paying quarterly distributions to the limited partners of the actual cash earned by the Partnership in the preceding quarter. Therefore, if expenses were to increase or income were to decrease the Partnership would decrease the quarterly distributions to the limited partners. Management does not expect the quarterly distributions to increase or decrease dramatically in the future unless operating properties are sold and proceeds are distributed to partners instead of reinvested. 9 10 The Partnership has purchased its properties for all cash. The Partnership may finance one or more of its existing properties if, among other conditions: (1) the property is held for at least two years (all properties have been owned by the Partnership for more than two years), (2) the financing proceeds equal or exceed the Partnership's investment in the property and (3) the Partnership distributes the financing proceeds to the partners. To date, the Partnership has not leveraged any of its properties. The cash of the Partnership decreased by $423,834 in 1996 when compared to the previous year. This decrease was due primarily to the $3,430,233 that was distributed to partners. In 1996, $1,941,423 was collected from real estate sales proceeds. Also, net cash provided by operating activities amounted to $1,058,327. In 1996, bad debt expense primarily related to two tenants, Toddle House Restaurants and Ponderosa, that did not pay rent. The Partnership is currently in the process of attempting to re-lease or sell the properties related to these tenants. The cash and liquidity position of the Partnership has continued to increase over the past three years. Management believes that the Partnership is in a very stable liquidity position since it owns all of its real estate free of debt. Management expects that the liquidity of the Partnership will change in the future as excess cash is distributed to the unit holders (partners). CAPITAL RESOURCES The Partnership is in the business of purchasing and holding improved commercial properties for long-term investment income. The Partnership currently owns and manages sixteen properties. Fifteen of the properties are single tenant buildings and one property is vacant land. Each of the Partnership's present properties, with the exception of the land, is leased to an operator/lessee on an absolute net basis, whereby the lessee pays all maintenance, repairs, property taxes and insurance. Two properties however, are leased to tenants not paying rent. These leases provide a minimum rental plus a percentage of the lessee's gross revenues from the property operation and/or a cost of living increase and/or a fixed rental increase. The total cost of the properties to the Partnership is $7,475,542. The Partnership also had cash of $1,393,367 at December 31, 1996. RECENT ACCOUNTING PRONOUNCEMENTS In 1996, the Partnership adopted the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 121 ("FAS 121") "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which became effective for fiscal years beginning after December 15, 1995. FAS 121 establishes standards for determining when impairment losses on long-lived assets have occurred and how impairment losses should be measure. The financial statement impact of adopting FAS 121 was not material. CERTAIN CAUTIONARY STATEMENTS Certain statements in this Form 10-K may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities and Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results of the Partnership to be materially different from historical results or from any results expressed or implied by such forward-looking statements. 10 11 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Partnership is filing as part of this report, its financial statements which contain the following: Page ---- 1) Report of Independent Accountants F-2 2) Balance Sheets December 31, 1996 and 1995 F-3 3) Statements of Income Years Ended December 31, 1996, 1995 and 1994 F-4 4) Statements of Changes in Partners' Equity Years Ended December 31, 1996, 1995 and 1994 F-5 5) Statements of Cash Flows Years Ended December 31, 1996, 1995 and 1994 F-6 6) Notes to Financial Statements F-7 7) Financial Statement Schedules: II - Valuation and Qualifying Accounts Years Ended December 31, 1996, 1995 and 1994 F-11 III - Real Estate and Accumulated Depreciation December 31, 1996 F-12 PART III ITEM 10. GENERAL PARTNERS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP The general partners of the Partnership are Excel Realty Trust, Inc., a Maryland corporation, and Gary B. Sabin. Neither Gary B. Sabin nor the executive officers of Excel Realty Trust, Inc. receive compensation from the Partnership. The General Partner and the officers and employees of Excel Realty Trust, Inc. spend such time in the administration of Partnership affairs to the extent deemed necessary. The names, ages and positions of responsibility held by the executive officers and directors of Excel Realty Trust, Inc. are as follows: Name Age Position ----------------- --- ------------------------------- Gary B. Sabin 42 President and Chairman of the Board Richard B. Muir 41 Executive Vice President and Director David A. Lund 45 Chief Financial Officer Ronald H. Sabin 46 Senior Vice President Graham R. Bullick 46 Senior Vice President Mark T. Burton 36 Senior Vice President S. Eric Ottesen 41 General Counsel and Senior Vice President 11 12 FAMILY RELATIONSHIPS Gary B. Sabin and Ronald H. Sabin are brothers. BUSINESS EXPERIENCE The following is a brief background of the directors and executive officers of Excel Realty Trust, Inc (the "Company"). GARY B. SABIN has served as Chief Executive Officer, President and Chairman of the Board of Directors since January 1989. He is a graduate of Brigham Young University and Stanford University's Graduate School of Business where he received a master's degree as a Sloan Fellow. Mr. Sabin has extensive experience in the financial services industry with emphasis in the areas of commercial real estate and marketable securities. RICHARD B. MUIR has served as Executive Vice President, Secretary and Director of the Company since January 1989. Mr. Muir has worked extensively in the field of commercial real estate, developing expertise in real estate acquisition, property management, leasing and project financing. DAVID A. LUND, CPA has served as Chief Financial Officer of the Company since June 1994. He previously served from 1989 to 1994 in various capacities with the Company, including Vice President and Vice President of Finance. From 1983 to 1989 he worked for various affiliated companies. Prior to 1983, Mr. Lund was a partner in a CPA firm. RONALD H. SABIN has served as Senior Vice President of the Company in charge of property management since January 1989. Mr. Sabin has also served in various similar capacities with other affiliated companies since 1979. GRAHAM R. BULLICK, Ph.D. has served as Senior Vice President of the Company since January 1991. Prior to joining the company, Mr. Bullick served for four years as an account manager of a company specializing in organizational development and service/quality systems. MARK T. BURTON has served as Vice President of the Company since January 1989 and as a Senior Vice President since January 1996. Mr. Burton's duties for the Company primarily consist of the evaluation and selection of property acquisitions and dispositions. Mr. Burton has served in various capacities with other affiliated companies since 1984. S. ERIC OTTESEN has served as General Counsel of the Company since January 1995. Prior to 1995, Mr. Ottesen worked as a partner in a law firm. ITEM 11. EXECUTIVE COMPENSATION The Partnership has no executive officers and has not paid nor proposes to pay any compensation or retirement benefits to the directors or executive officers of Excel Realty Trust, Inc. See ITEM 13 for compensation to the general partner. 12 13 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT No person is known by the Partnership to be the beneficial owner of more than 5% of the limited partner units. The following information sets forth the number of units owned directly or indirectly by each general partner. PERCENT OF NUMBER UNITS AT TITLE OF CLASS BENEFICIAL OWNER OF UNITS 12/31/96 -------------------- ---------------- -------- ---------- Units of Limited Partnership Interest Gary B. Sabin None None Units of Limited Excel Realty Partnership Interest Trust, Inc. 853 0.624% ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The table below reflects compensation paid to the general partner or their affiliates during the year ended December 31, 1996: DESCRIPTION AMOUNT ------------------- -------- Management fees $ 9,414 Administrative fees 10,800 Accounting 16,080 ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (A) Documents filed as part of this report: (1) (2) Financial statements under Item 8 in Part II hereof. (3) Exhibits: None (B) Reports on Form 8-K No reports on Form 8-K have been filed during the past year. 13 14 SIGNATURES Pursuant to the requirement 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. Date: March 7, 1997 Excel Properties, Ltd. (Registrant) Excel Realty Trust, Inc. (General Partner) By: /s/ Gary B. Sabin ------------------------------ Gary B. Sabin President By: /s/ David A. Lund ------------------------------ David A. Lund Principal Financial Officer 14 15 INDEX TO FINANCIAL STATEMENTS __________ PAGE ---- 1. FINANCIAL STATEMENTS: Report of Independent Accountants - Squire & Co. . . . . . . . . . . . . . . . . . . . . . . . F-2 Balance Sheets December 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3 Statements of Income Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-4 Statements of Changes in Partners' Equity Years Ended December 31, 1996, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . . F-5 Statements of Cash Flows Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-6 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7 2. FINANCIAL STATEMENT SCHEDULES: Schedule II - Valuation and Qualifying Accounts Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . F-11 Schedule III - Real Estate and Accumulated Depreciation December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-12 F-1 16 REPORT OF INDEPENDENT ACCOUNTANTS To the Partners Excel Properties, Ltd. We have audited the accompanying balance sheets of Excel Properties, Ltd., as of December 31, 1996 and 1995, and the related statements of income, changes in partners' equity, and cash flows for each of the three years in the period ended December 31, 1996. 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 referred to above present fairly, in all material respects, the financial position of Excel Properties, Ltd., as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. Financial statement Schedules II and III are presented for the purpose of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. SQUIRE & CO. February 6, 1997 Poway, California F-2 17 EXCEL PROPERTIES, LTD. BALANCE SHEETS DECEMBER 31, 1996 AND 1995 -------------------- 1996 1995 ----------- ----------- ASSETS Real estate: Land $ 2,917,587 $ 3,822,602 Buildings 4,557,955 6,015,835 Less: accumulated depreciation (1,261,704) (1,423,718) ----------- ----------- Net real estate 6,213,838 8,414,719 Cash 1,393,367 1,817,201 Escrow deposits 963,968 - Accounts receivable, less allowance for bad debts of $236,017 and $51,595 in 1996 and 1995, respectively 79,217 165,083 Notes receivable 1,009,023 1,015,672 Interest receivable 5,890 5,192 ----------- ----------- Total assets $ 9,665,303 $11,417,867 =========== =========== LIABILITIES AND PARTNERS' EQUITY Liabilities: Accounts payable: Affiliates $ 864 $ 867 Other 935 3,169 Property taxes payable - 939 Tenant security deposits 5,000 5,000 Deferred rental income 39,099 40,238 ----------- ----------- Total liabilities 45,898 50,213 ----------- ----------- Partners' Equity: General partner's equity 23,573 8,691 Limited partners' equity, 235,308 units authorized, 135,299 units issued and outstanding 9,595,832 11,358,963 ----------- ----------- Total partners' equity 9,619,405 11,367,654 ----------- ----------- Total liabilities and partners' equity $ 9,665,303 $11,417,867 =========== =========== The accompanying notes are an integral part of the financial statements F-3 18 EXCEL PROPERTIES, LTD. STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -------------------- 1996 1995 1994 ---------- ---------- ---------- Revenue: Base rent $1,011,114 $1,146,919 $1,098,571 Percentage rents 36,901 38,452 47,085 Interest and other income 202,786 129,399 112,772 ---------- ---------- ---------- Total revenue 1,250,801 1,314,770 1,258,428 ---------- ---------- ---------- Operating Expenses: Bad debts 183,608 50,617 (16,640) Depreciation 176,133 193,696 212,716 Accounting and legal 40,424 18,969 25,355 Property taxes 17,962 - 114 Administrative 10,800 10,800 10,800 Management fees 9,414 10,186 11,959 Office expenses 7,882 7,203 7,800 Miscellaneous 3,237 2,536 2,129 ---------- ---------- ---------- Total operating expenses 449,460 294,429 254,233 ---------- ---------- ---------- Net Income before real estate sales 801,341 1,020,341 1,004,195 Gain - sale of real estate 880,643 450,293 - ---------- ---------- ---------- Net income $1,681,984 $1,470,634 $1,004,195 ========== ========== ========== Net income allocated to: General partner $ 49,182 $ 15,303 $ 12,169 Limited partners 1,632,802 1,455,331 992,026 ---------- ---------- ---------- Total $1,681,984 $1,470,634 $1,004,195 ========== ========== ========== Net income per weighted average limited partnership unit $12.07 $10.77 $7.33 ====== ====== ===== The accompanying notes are an integral part of the financial statements F-4 19 EXCEL PROPERTIES, LTD. STATEMENTS OF CHANGES IN PARTNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -------------------- GENERAL LIMITED PARTNERS PARTNERS TOTAL -------- ----------- ----------- Balance at January 1, 1994 $ 5,027 $11,301,247 $11,306,274 Liquidation of Limited Partnership units - 1994 - (39,000) (39,000) Syndication fees - 1994 - 7,800 7,800 Net income - 1994 12,169 992,026 1,004,195 Partner distributions - 1994 (12,196) (1,207,496) (1,219,692) -------- ----------- ----------- Balance at December 31, 1994 5,000 11,054,577 11,059,577 Liquidation of Limited Partnership units - 1995 - (2,000) (2,000) Syndication fees - 1995 - 600 600 Net income - 1995 15,303 1,455,331 1,470,634 Partner distributions - 1995 (11,612) (1,149,545) (1,161,157) -------- ----------- ----------- Balance at December 31, 1995 8,691 11,358,963 11,367,654 Net income - 1996 49,182 1,632,802 1,681,984 Partner distributions - 1996 (34,300) (3,395,933) (3,430,233) -------- ----------- ----------- Balance at December 31, 1996 $ 23,573 $ 9,595,832 $ 9,619,405 ======== =========== =========== The accompanying notes are an integral part of the financial statements F-5 20 EXCEL PROPERTIES, LTD. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 -------------------- 1996 1995 1994 ----------- ----------- ----------- Cash flows from operating activities: Net income $ 1,681,984 $ 1,470,634 $ 1,004,195 Adjustments to reconcile net income to net cash provided by operations: Depreciation 176,133 193,696 212,716 Allowance for doubtful accounts 184,422 50,617 (98,192) Gain on sale of real estate (880,643) (450,293) - Changes in operating assets and liabilities: (Increase) decrease in assets: Accounts receivable (95,237) (196,565) 123,086 Interest receivable (698) 46 41 Increase (decrease) in liabilities: Accounts payable (2,237) 568 (4,308) Property taxes payable (4,258) (7,837) 7,074 Deferred rental income (1,139) (21,792) 14,786 ----------- ----------- ----------- Net cash provided by operating activities 1,058,327 1,039,074 1,259,398 ----------- ----------- ----------- Cash flows from investing activities: Proceeds from real estate sales 1,941,423 2,703,525 - Purchase of real estate - (1,410,234) - Collection of notes receivable 6,649 6,340 5,821 ----------- ----------- ----------- Net cash provided by investing activities 1,948,072 1,299,631 5,821 ----------- ----------- ----------- Cash flows from financing activities: Redemption of partnership units - (2,000) (39,000) Syndication costs reimbursed - 600 7,800 Cash distributions (3,430,233) (1,161,157) (1,219,692) ----------- ----------- ----------- Net cash used by financing activities (3,430,233) (1,162,557) (1,250,892) ---------- ----------- ----------- Net increase (decrease) in cash (423,834) 1,176,148 14,327 Cash at beginning of year 1,817,201 641,053 626,726 ----------- ----------- ----------- Cash at end of year $ 1,393,367 $ 1,817,201 $ 641,053 =========== =========== =========== The accompanying notes are an integral part of the financial statements F-6 21 EXCEL PROPERTIES, LTD. NOTES TO FINANCIAL STATEMENTS -------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ORGANIZATION Excel Properties, Ltd. was formed in the State of California on September 19, 1985, for the purpose of, but not limited to, acquiring real property and syndicating such property. REAL ESTATE Land and buildings are recorded at cost. Buildings are depreciated using the straight-line method over the tax life of 31.5 years. The tax life does not differ materially from the economic useful life. Expenditures for maintenance and repairs are charged to expense as incurred. Significant renovations are capitalized. The cost and related accumulated depreciation of real estate are removed from the accounts upon disposition. Gains and losses arising from the dispositions are reported as income or expense. CASH DEPOSITS At December 31, 1996, the carrying amount of the Partnership's cash deposits total $1,396,366. The bank balances are $1,419,003 of which $200,000 is covered by federal depository insurance. STATEMENT OF CASH FLOWS - SUPPLEMENTAL DISCLOSURE There was no interest or taxes paid for the years ended December 31, 1996, 1995 or 1994. In 1996, proceeds from the sale of a restaurant in Colorado were deposited in an escrow account and are excluded from the statement of cash flows. The Partnership had no noncash investing or financing transactions in 1995 or 1994. INCOME TAXES The Partnership is not liable for payment of any income taxes because as a partnership, it is not subject to income taxes. The tax effects of its activities accrue directly to the partners. ACCOUNTS RECEIVABLE All net accounts receivable are deemed to be collectible within the next 12 months. FINANCIAL STATEMENT ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Continued F-7 22 EXCEL PROPERTIES, LTD. NOTES TO FINANCIAL STATEMENTS, CONTINUED -------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: RECLASSIFICATIONS Certain reclassifications have been made to the financial statements for the years ended December 31, 1995 and 1994 in order to conform with the current period presentation. 2. FINANCIAL STATEMENT AND TAX RETURN DIFFERENCES The Partnership had the following differences between the financial statements and the Partnership tax return. 1996 1995 1994 ----------- ----------- ----------- Net income: Financial statements $ 1,681,984 $ 1,470,634 $ 1,004,195 Tax returns 1,870,650 1,508,743 906,004 ----------- ----------- ----------- Difference $ (188,666) $ (38,109) $ 98,191 =========== =========== =========== Difference is due to: Allowance for bad debts $ (184,422) $ (50,617) $ 98,191 Deferred gain - like kind exchange (4,244) 12,508 - ----------- ----------- ----------- $ (188,666) $ (38,109) $ 98,191 =========== =========== =========== Partners' equity: Financial statements $ 9,619,405 $11,367,654 $11,059,577 Tax returns 11,056,481 12,616,064 12,270,479 ----------- ----------- ----------- Difference $(1,437,076) $(1,248,410) $(1,210,902) =========== =========== =========== Difference is due to: Syndication costs $(1,498,718) $(1,498,718) $(1,499,319) Allowance for bad debts (236,017) (51,595) (978) Deferred gain - like-kind exchange 8,264 12,508 - Deferred gain on sale of building 289,395 289,395 289,395 ----------- ----------- ----------- $(1,437,076) $(1,248,410) $(1,210,902) =========== =========== =========== 3. FEES PAID TO GENERAL PARTNER: The Partnership has paid the General Partner or its affiliates the following fees: 1996 1995 1994 ------- ------- ------- Management fees $ 9,414 $10,186 $11,959 Administrative fees 10,800 10,800 10,800 Accounting 16,080 6,480 6,480 Continued F-8 23 EXCEL PROPERTIES, LTD. NOTES TO FINANCIAL STATEMENTS, CONTINUED __________ 4. NOTES RECEIVABLE: The Company had the following notes receivable at December 31, 1996 and 1995: 1996 1995 ---------- ---------- Note from sale of building, receipts of $1,390 per month at 9% interest. Secured by building sold. Due July 1997. $ 139,424 $ 143,455 Note from sale of building, interest only receipts of $5,366 per month at 8.5% interest. Secured by building sold. Due November 2003. 757,500 757,500 Note from sale of building, receipts of $1,004 per month at 8% interest. Secured by building sold. Due December 2001. 111,999 114,717 ---------- ---------- Total notes receivable $1,008,923 $1,015,672 ========== ========== 5. MINIMUM FUTURE RENTALS: The Company leases single-tenant buildings to tenants under noncancelable operating leases requiring the greater of fixed or percentage rents. The leases are either: (1) triple-net, requiring the tenant to pay all expenses of operating the property such as insurance, property taxes, repairs and utilities, or (2) requiring the tenant to reimburse the Company for substantially all of the tenant's share of real estate taxes and other common area maintenance expenses. Minimum future rental revenue for the next five years for the commercial real estate currently owned and subject to noncancelable operating leases is as follows: YEAR ENDING DECEMBER 31, ----------------------- 1997 $ 856,133 1998 847,414 1999 822,445 2000 761,452 2001 638,708 Thereafter 1,975,704 Continued F-9 24 EXCEL PROPERTIES, LTD. NOTES TO FINANCIAL STATEMENTS, CONTINUED -------------------- 6. REAL ESTATE: During 1996, the Partnership sold four properties and a parcel of land. In April 1996, the Partnership sold a Kentucky Fried Chicken building and a Wendy's building located in Blaine Minnesota for $901,187. The Partnership recognized a net gain of $206,761 on these sales. In October 1996, the partnership sold a building that was leased to Checker Autoworks in Denver, Colorado for $811,494 of which the Partnership recognized a $208,072 gain. Also in October 1996, the Partnership sold a land parcel for $75,357 and recognized a $9,004 gain. The land parcel was located in Las Vegas, Nevada as mentioned below in the 1995 sales transactions. Finally, in December 1996, the Partnership sold a building leased to Denny's Restaurant and located in Denver, Colorado for $963,968 and recognized a $456,806 gain. The following unaudited Pro Forma Condensed Statement of Income has been presented as if the 1996 sales had occurred on January 1, 1996. The unaudited Pro Forma Condensed Statement of Income should be read in conjunction with the audited financial statements. In management's opinion, all adjustments necessary to reflect these transactions have been made. The unaudited Pro Forma Condensed Statement of Income is not necessarily indicative of what actual results of operations of the partnership would have been had this transaction actually occurred as of January 1, 1996 nor do they purport to represent the results of operations of the Partnership for future periods. FOR THE YEAR ENDED DECEMBER 31, 1996 ---------------------------------------------------- PRO FORMA COMPANY HISTORICAL ADJUSTMENTS PRO FORMA ----------- ----------- ----------- Revenue $ 1,251,000 $ (191,000) $ 1,060,000 Operating Expenses 449,000 (27,000) 422,000 Gain on Sale of Real Estate 880,000 - 880,000 ----------- ---------- ----------- Net Income $ 1,682,000 $ (164,000) $ 1,518,000 =========== ========== =========== In March 1995, the Partnership purchased a 39% undivided interest in a parcel of ground in Las Vegas, Nevada for $1,410,233. The ground was leased with the Partnership's share of rent equaling $169,228 per year. The ground was subdivided into three building lots and the lessee constructed a building on one of the three lots. The building was sold in November 1995 and one of the land parcels in 1995. The sales price was $1,566,234 and the Partnership recognized a $351,152 gain on the sale. In February 1995, the Partnership also sold a building in Phoenix, Arizona that was on lease to Childrens World. The sales price was $1,135,000 less $28,729 in selling expenses. The Partnership recognized a gain of $99,141. F-10 25 EXCEL PROPERTIES, LTD. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 Additions Deductions ------------ ----------------------------- Balance at Balance at Beginning Charged to End Description of Year Expense Description Amount of Year - ---------------------------- ---------- ------------ ---------------- -------- ----------- Year ended December 31, 1996: Allowance for bad debts $ 51,595 $ 183,608 Reconciling Item $ (814) $ 236,017 ---------- ------------ -------- ----------- Year ended December 31, 1995: Allowance for bad debts $ 978 $ 50,617 $ - $ 51,595 ---------- ------------ -------- ----------- Year ended December 31, 1994: Allowance for bad debts $ 99,170 $ (16,640) Write-off account $ 81,552 $ 978 ---------- ------------ -------- ----------- F-11 26 EXCEL PROPERTIES, LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1996 Cost Capitalized Subsequent to Initial Cost Acquisition --------------------------- ----------- Buildings and Description Encumbrance Land Improvements Improvements - -------------------- ----------- ----------- ------------ ------------ Kinder Care: Columbus, Ohio $ - $ 57,101 $ 133,236 $ - Gahanna, Ohio - 65,047 151,776 - West Carrollton, Ohio - 57,101 133,236 - Grove City, Ohio - 66,702 155,638 - Dayton, Ohio - 57,101 133,236 - Indianapolis, Indiana - 60,324 140,756 Indianapolis, Indiana - 60,324 140,755 - Paragon Restaurant: Middleburg Heights, Ohio - 313,867 732,355 - Lafayette, Indiana - 324,028 756,068 - Autoworks: Omaha, Nebraska - 275,432 413,148 - Ponderosa: Ann Arbor, Michigan - 379,809 379,809 - Alton, Illinois - 369,740 554,639 (153,386) Volume Shoe-Plant City, FL - 398,104 250,018 - Benjamins-Burnsville, MN - 216,612 505,428 - Toddle House-Kenner, LA - 87,495 131,243 - Land-Las Vegas, NV - 128,800 - - ---------- ----------- ----------- ------------ $ - $ 2,917,587 $ 4,711,341 $ (153,386) ========== =========== =========== ============ (a) Also represents cost for federal income tax purposes. (b) Reconciliation of total real estate carrying value for the three years ended December 31, 1996 is as follows: Gross Amount at Which Life on Which Carried at Close of Period Depreciation ----------------------------------------- Accumu- in Latest Buildings lated Income and Total Depreci- Date Statements Land Improvements (a)(b) ation(c) Acquired is Computed ------------ ----------- ----------- ----------- -------- ----------- Kinder Care: Columbus, Ohio $ 57,101 $ 133,236 $ 190,337 $ 40,711 1987 31.5 years Gahanna, Ohio 65,047 151,776 216,823 46,376 1987 31.5 years West Carrollton, Ohio 57,101 133,236 190,337 40,711 1987 31.5 years Grove City, Ohio 66,702 155,638 222,340 47,556 1987 31.5 years Dayton, Ohio 57,101 133,236 190,337 40,711 1987 31.5 years Indianapolis, Indiana 60,324 140,756 201,080 34,071 1989 31.5 years Indianapolis, Indiana 60,324 140,755 201,079 34,071 1987 31.5 years Paragon Restaurant: Middleburg Heights, Ohio 313,867 732,355 1,046,222 219,900 1987 31.5 years Lafayette, Indiana 324,028 756,068 1,080,096 223,019 1987 31.5 years Autoworks: Omaha, Nebraska 275,432 413,148 688,580 110,938 1988 31.5 years Ponderosa: Ann Arbor, Michigan 379,809 379,809 759,618 95,957 1989 31.5 years Alton, Illinois 369,740 401,253 770,993 140,127 1989 31.5 years Volume Shoe-Plant City, FL 398,104 250,018 648,122 55,891 1989 31.5 years Benjamins-Burnsville, MN 216,612 505,428 722,040 110,312 1990 31.5 years Toddle House-Kenner, LA 87,495 131,243 218,738 21,353 1991 31.5 years Land-Las Vegas, NV 128,800 - 128,800 - 1995 ----------- ----------- ----------- ----------- $ 2,917,587 $ 4,557,955 $ 7,475,542 $ 1,261,704 =========== =========== =========== =========== (a) Also represents cost for federal income tax purposes. (b) Reconciliation of total real estate carrying value for the three years ended December 31, 1996 is as follows: 1996 1995 1994 ------------- -------------- --------------- Balance at beginning of year $ 9,838,437 $ 10,815,480 $ 10,815,480 Acquistions - 1,410,234 - Cost of property sold (2,362,895) (2,387,277) - ------------- -------------- --------------- Balance at end of year $ 7,475,542 $ 9,838,437 $ 10,815,480 ------------- -------------- --------------- (c) Reconciliation of accumulated depreciation for the three years ended December 31, 1996 is as follows: 1996 1995 1994 ------------ -------------- --------------- Balance at beginning of year $ 1,423,718 $ 1,364,067 $ 1,151,352 Expense 176,133 193,696 212,715 Deletions (338,147) (134,045) - ------------- -------------- --------------- Balance at end of year $ 1,261,704 $ 1,423,718 $ 1,364,067 ------------- -------------- --------------- F-12