SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
---------
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____________ to ____________
Commission File Number 0-10430
DE ANZA PROPERTIES - XII, LTD.
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3601367
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
9171 WILSHIRE BOULEVARD, SUITE 627
BEVERLY HILLS, CALIFORNIA 90210
(Address of principal executive offices, including zip code)
(310) 550-1111
(The registrant's telephone number, including area code)
NO CHANGE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
Pursuant to the Securities Exchange Act of 1934 Release 15502 and Rule
240.0-3(b) (17 CFR 240.0-3(b)), the pages of this document have been numbered
sequentially. The total number of pages contained herein is 16.
1
TABLE OF CONTENTS
-----------------
PART I. FINANCIAL INFORMATION
- ------ ---------------------
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets 3
Statements of Operations 5
Statements of Changes in Partners'
Capital (Deficit) 7
Statements of Cash Flows 8
Notes to Financial Statements 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 14
PART II. OTHER INFORMATION 15
- ------- -----------------
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Balance Sheets
(Unaudited)
September 30, December 31,
1998 1997
------------- ------------
ASSETS
CASH AND CASH EQUIVALENTS - Note 1 $835,243 $ 876,533
ACCOUNTS RECEIVABLE 980 2,289
PREPAID EXPENSES 46 38,312
-------- -----------
836,269 917,134
-------- -----------
NOTES RECEIVABLE - Note 5 32,328 217,248
-------- -----------
PROPERTY AND EQUIPMENT - Notes 2 and 5
Land - 1,179,884
Land improvements - 3,560,450
Buildings and improvements - 9,914,217
Furniture and equipment - 484,385
-------- -----------
- 15,138,936
Less accumulated depreciation - 7,270,812
-------- -----------
- 7,868,124
-------- -----------
OTHER ASSETS
Loan costs - less accumulated amortization
of $26,497 at December 31, 1997 -
Note 2 - 70,837
Prepaid sale costs Note 5 - 45,754
Other 1,000 1,000
-------- -----------
1,000 117,591
-------- -----------
$869,597 $ 9,120,097
======== ===========
See accompanying notes to financial statements.
3
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Balance Sheets (Continued)
(Unaudited)
September 30, December 31,
1998 1997
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES -
including $6,760 and $8,768 due to
related party at September 30, 1998
and December 31, 1997, respectively $111,993 $ 124,114
DEPOSITS AND ADVANCE RENTALS - 43,885
SECURED NOTE PAYABLE - Note 2 - 4,170,474
-------- -----------
111,993 4,338,473
-------- -----------
PARTNERS' CAPITAL (DEFICIT)
General partners - (1,629,110)
Limited partners, 22,719 units issued
and outstanding 757,604 6,410,734
-------- -----------
757,604 4,781,624
-------- -----------
$869,597 $ 9,120,097
======== ===========
See accompanying notes to financial statements.
4
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Operations
(Unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
1998 1997
------------- -------------
INCOME
Rent $ 84,626 $1,697,962
Interest and dividends 89,017 38,159
Other 6,438 101,198
Gain on sale of property and equipment 11,748,033 236,094
----------- ----------
11,928,114 2,073,413
----------- ----------
EXPENSES
Depreciation and amortization 70,937 106,989
Salaries - including $14,818 and $11,736
paid to related party in 1998 and
1997, respectively - Note 3 64,961 149,211
Professional fees and services -
including $9,993 and $43,980 paid
to related party in 1998 and 1997,
respectively - Note 3 60,761 119,559
Other 36,935 54,745
Interest 11,359 230,975
Maintenance, repairs and supplies 11,307 183,728
Insurance 10,753 44,599
Payroll taxes and employee benefits 9,467 30,269
Utilities 6,363 135,789
Real estate taxes 5,629 116,638
----------- ----------
288,472 1,172,502
----------- ----------
NET INCOME $11,639,642 $ 900,911
=========== ==========
NET INCOME
GENERAL PARTNERS $ 1,629,110 $ 9,009
=========== ==========
LIMITED PARTNERS $10,010,532 $ 891,902
=========== ==========
INCOME PER 1% GENERAL
PARTNER INTEREST - Note 4 $ 16,291.10 $ 90.09
=========== ==========
INCOME PER LIMITED
PARTNERSHIP UNIT - Note 4 $ 440.62 $ 39.26
=========== ==========
See accompanying notes to financial statements.
5
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Operations
(Unaudited)
Three Months Three Months
Ended Ended
September 30, September 30,
1998 1997
------------- -------------
INCOME
Rent $ - $563,403
Interest and dividends 7,284 12,919
Other 76 9,303
Gain on sale of property and equipment - 159,096
-------- --------
7,360 744,721
-------- --------
EXPENSES
Depreciation and amortization - 1,672
Salaries - including $8,102 and $4,124
paid to related party in 1998 and
1997, respectively - Note 3 8,103 52,426
Professional fees and services -
including $1,110 and $14,923 paid
to related party in 1998 and 1997,
respectively - Note 3 4,823 20,943
Other 16,422 10,401
Interest 10 77,484
Maintenance, repairs and supplies - 56,482
Insurance 17 14,761
Payroll taxes and employee benefits - 8,920
Utilities 24 47,282
Real estate taxes - 38,832
-------- --------
29,399 329,203
-------- --------
NET INCOME (LOSS) $(22,039) $415,518
======== ========
NET INCOME (LOSS)
GENERAL PARTNERS $ - $ 4,155
======== ========
LIMITED PARTNERS $(22,039) $411,363
======== ========
INCOME (LOSS) PER 1% GENERAL
PARTNER INTEREST - Note 4 $ - $ 41.55
======== ========
INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT - Note 4 $ (0.97) $ 18.11
======== ========
See accompanying notes to financial statements.
6
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Changes in Partners' Capital (Deficit)
(Unaudited)
For the Nine Months Ended September 30, 1998 and
For the Year Ended December 31, 1997
General Limited
Total Partners Partners
------------ ----------- ------------
BALANCE - January 1, 1997 $ 3,586,232 $(1,648,564) $ 5,234,796
DISTRIBUTIONS TO PARTNERS (750,000) - (750,000)
NET INCOME - for the year
ended December 31, 1997 1,945,392 19,454 1,925,938
------------ ----------- ------------
BALANCE - December 31, 1997 4,781,624 (1,629,110) 6,410,734
DISTRIBUTIONS TO PARTNERS (15,663,662) - (15,663,662)
NET INCOME - for the nine
months ended September 30,
1998 11,639,642 1,629,110 10,010,532
------------ ----------- ------------
BALANCE - September 30, 1998 $ 757,604 - $ 757,604
============ =========== ============
See accompanying notes to financial statements.
7
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Cash Flows
(Unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
1998 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Gross rents received from real estate
operations $ 46,815 $1,694,912
Cash paid to suppliers and employees -
including $40,339 and $76,804
paid to related party in 1998
and 1997, respectively (263,098) (796,394)
Interest paid (25,571) (231,402)
Interest and other income received 90,289 139,720
------------ ----------
Net cash (used in) provided by
operating activities (151,565) 806,836
------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (1,716) (114,580)
Payments received on notes receivable 184,920 55,860
Sale of property and equipment 20,107,599 100,000
Sales and closing costs (444,072) (29,761)
------------ ----------
Net cash provided by
investing activities 19,846,731 11,519
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Adjustment for uncashed payments 97,680 -
Principal payments on secured notes
payable (4,170,474) (38,987)
Partner distributions (15,663,662) (562,500)
------------ ----------
Net cash used in
financing activities (19,736,456) (601,487)
------------ ----------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (41,290) 216,868
CASH AND CASH EQUIVALENTS:
BALANCE AT BEGINNING OF PERIOD 876,533 631,598
------------ ----------
BALANCE AT END OF PERIOD $ 835,243 $ 848,466
============ ==========
See accompanying notes to financial statements.
8
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Cash Flows (Continued)
(Unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
1998 1997
------------- -------------
RECONCILIATION OF NET INCOME TO NET CASH
(USED IN) PROVIDED BY OPERATING ACTIVITIES
Net income $ 11,639,642 $ 900,911
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities
Depreciation and amortization 70,937 106,989
Gain on sale of property and equipment (11,748,033) (236,094)
Changes in operating assets and
liabilities
Decrease in accounts receivable 1,309 3,337
Decrease (increase) in prepaid expenses 38,266 (13,134)
Decrease (increase) in accounts
payable and accrued expenses (109,801) 50,449
Decrease in deposits and advance
rentals (43,885) (5,622)
------------ ---------
Net cash (used in) provided by
operating activities $ (151,565) $ 806,836
============ =========
See accompanying notes to financial statements.
9
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements
(Unaudited)
September 30, 1998 and December 31, 1997 and
For the Nine and Three Months Ended September 30, 1998 and 1997
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) have been included.
Operating results during the nine and three months ended September 30,
1998 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1998. For further
information, refer to the financial statements and footnotes thereto
included in the Partnership's annual report on Form 10-K for the year
ended December 31, 1997.
Cash and Cash Equivalents
-------------------------
The Partnership invests its cash not needed for working capital in
highly liquid short-term investments consisting primarily of money
market funds and certificates of deposit, with original maturities
ranging generally from one to three months. The Partnership considers
all such items to be cash equivalents.
Depreciation
------------
Pursuant to generally accepted accounting principles the Partnership
ceased to depreciate Warner Oaks Apartments ("Warner Oaks") from the
time it determined to sell the property (see Note 5).
NOTE 2 - SECURED NOTE PAYABLE
Secured note payable at December 31, 1997 consisted of the following:
Note collateralized by a first trust deed,
payable in monthly installments of $29,997,
including interest until December 15, 1997.
Thereafter, the monthly payment changes
annually on each December 15th. Interest
accrues at 2.5% over the FHLB's 11th District
Cost of Funds Index, not to exceed 12.9%,
adjusted monthly. Unpaid principal and
accrued interest are due November 15, 2008.
The interest rate in effect at December 31,
1997 was 7.44%. The note was paid on January
14, 1998 upon the sale of Warner Oaks. $4,170,474
==========
10
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
September 30, 1998 and December 31, 1997 and
For the Nine and Three Months Ended September 30, 1998 and 1997
NOTE 3 - TRANSACTIONS WITH RELATED PARTIES
Pursuant to a former management agreement dated October 1, 1985, as
amended, De Anza Assets, Inc., a former affiliate of the operating
general partner (OGP), was paid a management fee in the amount of 5%
of the annual gross receipts from the operations of the Partnership's
properties. The payment of this fee is subordinated to the priority
distribution to the limited partners of 7% of their adjusted capital
contributions each year and is noncumulative, except in the case of a
sale, refinancing or other disposition of the Partnership's
properties. In that case, the difference between the management fee
actually paid and the management fee that would have been paid if it
were not subordinated is payable out of proceeds of the sale,
refinancing or other disposition after payment of the limited
partners' priority return and capital contribution and the general
partners' incentive interest. However, management fees payable
subsequent to a consummated refinancing are not subordinated to the
limited partners' priority return to the extent the subordination
would have been caused by increased debt service charges. At December
31, 1996, cumulative accrued fees of $565,022 to De Anza Assets, Inc.
were subordinated and included in management and condominium
conversion fees payable to affiliate or related party. Shortly before
the sale to an affiliate of Manufactured Home Communities, Inc. (MHC),
as discussed in Note 5, De Anza Assets, Inc. assigned its rights to
receipt of these fees to the Gelfand Family Trust. In December 1997,
this payable was written off when it became apparent that it would not
be paid from proceeds from the then pending sale of Warner Oaks
Apartments under the terms of the partnership agreement.
On August 18, 1994, subsequent to the sale of the Mark and the
property management business of De Anza Group, Inc. (DAG), as
discussed in Note 5, the property management of Warner Oaks and the
two remaining spaces at San Luis Bay was assumed by Terra Vista
Management, Inc. (Terra Vista). Terra Vista is wholly owned by Michael
D. Gelfand, president of the OGP and the son of Herbert M. Gelfand.
Herbert M. Gelfand, together with Beverly Gelfand, is the sole
shareholder of the OGP and an individual general partner. At December
31, 1996, cumulative accrued fees to Terra Vista of $153,500, were
subordinated and included in management and condominium conversion
fees payable to affiliate or related party. In December 1997, this
payable was written off when it became apparent that it would not be
paid from proceeds from the then pending sale of Warner Oaks
Apartments under the terms of the partnership agreement.
Pursuant to the partnership agreement, a condominium conversion fee
equal to 1% of the sales price of the San Luis Bay homesites sold is
due to DAG (see Note 5). Payment of this fee was deferred pursuant to
the partnership agreement's requirement regarding subordination to
payment of the limited partners' priority return and capital
contribution, the general partners' incentive interest and deferred
management fees. Subordinated cumulative accrued fees of $77,809 were
included in management and condominium conversion fees payable to an
affiliate or related party at December 31, 1996. Shortly before the
sale to MHC, De Anza Assets, Inc. assigned its rights to receive these
fees to the Gelfand Family Trust. In December 1997, this payable was
written off when it became apparent that it would not be paid from
proceeds from the then
11
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
September 30, 1998 and December 31, 1997 and
For the Nine and Three Months Ended September 30, 1998 and 1997
NOTE 3 - TRANSACTIONS WITH RELATED PARTIES (Continued)
pending sale of Warner Oaks Apartments under the terms of the
partnership agreement.
In addition, Terra Vista was paid $40,339 and $76,804 during the nine
months ended September 30, 1998 and 1997, respectively, for performing
bookkeeping, legal, regional management, computer, disposition and
investor relations services necessary for the operation of the
Partnership and its properties. Of the $40,339, $9,347 is attributable
to the three months ended September 30, 1998 (compared to $37,814 paid
for the three months ended September 30, 1997).
NOTE 4 - INCOME (LOSS) PER 1% GENERAL PARTNER INTEREST AND LIMITED
PARTNERSHIP UNIT
Income (loss) per limited partnership unit is computed based on the
limited partners' share of net income (loss) as shown on the
Statements of Operations and Changes in Partners' Capital (Deficit)
and the number of limited partnership units outstanding (22,719
units). The general partners' share of net income (loss) has not been
included in this computation. Income (loss) per 1% general partner
interest is computed based on the general partners' share of net
income (loss) as shown on the Statements of Operations and Changes in
Partners' Capital (Deficit).
NOTE 5 - SALE OF PROPERTY AND EQUIPMENT
San Luis Bay
------------
On May 2, 1989, the Partnership entered into an agreement to sell San
Luis Bay Mobile Estates (the 162-space mobile home community in Avila
Beach, California) to the residents for an aggregate sales price of
$8,850,000 and, pursuant to that agreement, subdivided the property
into condominium units in 1991. The Partnership provided purchase
money financing for up to 80% of the individual homesite price,
payable in monthly payments, including interest at 10%, based on a
loan amortization schedule of 30 years, with a balloon payment of
unpaid principal and interest due at the end of seven years. At
September 30, 1998 and December 31, 1997, respectively, the
outstanding amounts due under such notes totaled $32,328 and $217,248.
Those residents who purchased their homesites for cash received a 10%
discount off their purchase price.
The Partnership sold 160 homesites prior to 1995. On May 1, 1997, the
Partnership sold one of the two remaining spaces at San Luis Bay for
$100,000. Net proceeds, after commission and sale and closing costs of
$7,112, was $92,888. On June 30, 1998, the Partnership sold the last
remaining homesite for $107,599. Net proceeds, after sale and closing
costs of $2,609, were $104,990.
12
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
September 30, 1998 and December 31, 1997 and
For the Nine and Three Months Ended September 30, 1998 and 1997
NOTE 5 - SALE OF PROPERTY AND EQUIPMENT (Continued)
The Mark
--------
On August 18, 1994 the Partnership sold The Mark to an affiliate of
MHC, a real estate investment trust, as part of an overall transaction
for the sale of the related management business of DAG and other
mobile home communities affiliated with DAG. In connection with the
sale, the Partnership established various reserves totaling $230,097.
The $230,097 was used to establish the following cash reserves:
MHC Reserve $ 42,000
General Reserve 130,094
Independent Committee Reserve 58,003
The MHC Reserve was required by MHC. It was released in 1995, at which
time the gain on sale was recognized. The General Reserve and
Independent Committee Reserve were established to fund contingent
liabilities that may arise out of the MHC transaction. During 1996 and
1995, $29,001 of the Independent Committee Reserve and the $42,000 MHC
Reserve, respectively, were released and distributed to the limited
partners as a return of original capital. During 1997, the balance of
the reserves, $159,096, was released.
Pursuant to the guidelines of Financial Accounting Standards No. 66,
"Accounting for Sales of Real Estate," the Partnership deferred in
1994 the recognition of gain on that portion of the sales proceeds,
represented by the MHC Reserve, General Reserve and Independent
Committee Reserve, totaling $230,097. As these reserves were released
or expended, gain on sale was recognized. During 1996 and 1995, the
Partnership recognized as income $29,001 attributable to the
Independent Committee Reserve released and $42,000 attributable to the
MHC Reserve released, respectively. During 1997, the Partnership
recognized as income $29,001 and $130,094 attributable to the
Independent Committee Reserve released and the General Reserve
released, respectively.
Warner Oaks Apartments
----------------------
In March 1997, the Partnership began actively marketing the Warner
Oaks Apartment complex. In accordance with Statement of Financial
Accounting Standards No. 121, the Partnership ceased depreciating the
assets' carrying value at that time. On October 15, 1997, the
Partnership entered into a contract to sell Warner Oaks Apartments to
Bay Apartment Communities, Inc., a Maryland Corporation, unaffiliated
with the Partnership, for an all-cash price of $20,000,000. The sale
closed on January 14, 1998. After payment of mortgage debt of
$4,170,474, broker's commission of $300,000, transfer taxes of
$112,000 and sales costs of approximately $75,217, the Partnership
netted sale proceeds of $15,342,309. On February 19, 1998, net
proceeds of $15,329,526 were distributed to the limited partners as a
combination of gain distributions and return of original capital.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
The Partnership's quick ratio increased to 7.5:1 from 5.2:1, including cash
balances of $835,243 and $876,533 at September 30, 1998 and December 31, 1997,
respectively. The increase is due to a decrease in deposits and advance
rentals and operating payables following the sale of Warner Oaks Apartments,
the sale of the remaining space at San Luis Bay and the receipt of balloon
payments on notes receivable. The Partnership's cash balance is its immediate
source of liquidity.
On January 14, 1998, the Partnership sold Warner Oaks Apartments, as discussed
in Note 5 to the financial statements, and expects to wind up its operations
in 1998 and dissolve. The Warner Oaks Apartments sale and related
distribution, sale of the one remaining space at San Luis Bay in June 1998 and
receipt of the balance of some note receivables, leaves the Partnership with
only one remaining note receivable and cash reserves as assets. The
Partnership expects to collect its note receivable (which matures December 31,
1998) in order to liquidate and terminate the Partnership in 1998. No
assurance can be given, however, that such termination will occur. As of
September 30, 1998, the amount of the note receivable outstanding was
approximately $32,328.
Other than as described elsewhere, there are no known trends, demands,
commitments, events or uncertainties which are reasonably likely to materially
affect the Partnership's liquidity.
Results of Operations
- ---------------------
The comparison of results of operations for the nine and three months ended
September 30, 1998 and 1997 is dominated by the sale of Warner Oaks
Apartments.
Rental and other income decreased 95.0% and 100.0% during the nine and three
months ended September 30, 1998 over the same periods in 1997 due to the sale
of Warner Oaks Apartments on January 14, 1998. Interest and dividend income
increased 133.3% and decreased 43.6%, respectively, during the nine and three
months ended September 30, 1998 over the same periods in 1997 because interest
was earned on sale proceeds held for a short period in the first quarter of
1998 until their distribution.
Expenses decreased 75.4% and 91.1% during the nine and three months ended
September 30, 1998 over the same periods in 1997 primarily due to the sale of
Warner Oaks Apartments on January 14, 1998. Additionally, according to
generally accepted accounting principles, from the time the Partnership
determined to sell Warner Oaks Apartments it ceased to depreciate the carrying
value of the assets. This decrease in depreciation expense is offset in part
by the write off of loan costs in 1998 following the repayment of mortgage
debt with Warner Oaks Apartments sale proceeds.
Other than as described above, there are no known trends or uncertainties
which have had or can be reasonably expected to have a material effect on
continuing operations.
14
PART II. OTHER INFORMATION
ITEM NUMBER
- -----------
1. LEGAL PROCEEDINGS
No new material legal proceedings were commenced during the three months
ended September 30, 1998 and there are none pending.
2. CHANGES IN SECURITIES
None.
3. DEFAULTS UPON SENIOR SECURITIES
None.
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
5. OTHER INFORMATION
None.
6. EXHIBITS AND REPORTS ON FORM 8-K
None.
15
PART II. OTHER INFORMATION (Continued)
SIGNATURES
Pursuant to the requirements 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.
DE ANZA PROPERTIES - XII, LTD.
(Registrant)
By DE ANZA CORPORATION
A California Corporation
Operating General Partner
Date: November 11, 1998 By /s/ Michael D. Gelfand
----------------------
Michael D. Gelfand
President and
Chief Financial Officer
16