1
Exhibit 99(b)
Financial Statements of Riverview Tower
Limited Partnership as at December 31, 1993, 1994 and 1995
2
MALITZ, WEINSTEIN & RUBIN CO.
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
December 31, 1993
INDEX
-----
AUDITORS' REPORT
STATEMENT OF ASSETS, LIABILITIES AND EQUITY EXHIBIT A
- INCOME TAX BASIS
As At December 31, 1993
ANALYSIS OF PARTNERS' EQUITY - INCOME TAX BASIS SCHEDULE A-1
For The Year Ended December 31, 1993
STATEMENT OF REVENUES AND EXPENSES - INCOME TAX BASIS EXHIBIT B
For The Year Ended December 31, 1993
STATEMENT OF CASH FLOWS - INCOME TAX BASIS EXHIBIT C
For The Year Ended December 31, 1993
NOTES TO FINANCIAL STATEMENTS EXHIBIT D
- INCOME TAX BASIS
3
Malitz Weinstein & Rubin Co.
CERTIFIED PUBLIC ACCOUNTANTS
3690 ORANGE PLACE - SUITE 250
CLEVELAND, OHIO 44122-4422
-----
TELEPHONE (216) 464-9560
-----
TELECOPIER (216) 464-2887
CHARLES P. MALITZ, CPA ROBERT W. BIATS
MILTON J. WEINSTEIN, CPA JENNIFER L. GARRIS
KIMBALL E. RUBIN, CPA KAREN M. CAROSCIO
JONATHAN P. ROGEN, CPA JUDITH R. BARTELL
SCOTT R. SWERESS, CPA February 18, 1994 GARY A. FERBER, CPA
STEVEN MARTON, CPA (1937-1990)
STEPHEN L. WOLF, CPA
INDEPENDENT AUDITOR'S REPORT
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
We have audited the accompanying statement of assets, liabilities and equity -
income tax basis of Riverview Tower Limited Partnership, A Limited Partnership,
as of December 31, 1993, and the related statements of revenues and
expenses - income tax basis, partners' equity - income tax basis and cash
flows - income tax basis for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating overall financial
statement presentation. We believe that our audit provides 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 Riverview Tower Limited
Partnership, A Limited Partnership as of December 31, 1993, and the results of
its operations and its cash flows for the year then ended in conformity with
the income tax basis of accounting, as described in Note 1.
/s/ Malitz, Weinstein, & Rubin Co.
4
MALITZ, WEINSTEIN & RUBIN CO. CERTIFIED PUBLIC ACCOUNTANTS, CLEVELAND, OHIO
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENT OF ASSETS, LIABILITIES AND EQUITY Exhibit A
- INCOME TAX BASIS
As At December 31, 1993
ASSETS
------
Cash $9,162.
Accounts Receivable 506.
Escrow Receivable 159,722.
Prepaid Expenses 22,916.
Property and Equipment 16,705,077.
Less: Accumulated Depreciation
and Amortization (8,042,295.)
-----------
TOTAL ASSETS $8,855,088.
===========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
LIABILITIES
Accounts Payable $2,092,044.
Accrued Interest and Real Estate Taxes 406,374.
Mortgage Payable 13,758,615.
-----------
Total Liabilities $16,257,O33.
PARTNERS' EQUITY - SCHEDULE A-1 (7,401,945.)
------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 8,855,088.
============
<FN>
SEE ACCOUNTANTS REPORT LETTER AND NOTES TO FINANCIAL STATEMENTS
5
MALITZ, WEINSTEIN & RUBIN CO. CERTIFIED PUBLIC ACCOUNTANTS. CLEVELAND, OHIO
Schedule A-1
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
ANALYSIS OF PARTNERS' EQUITY
- INCOME TAX BASIS
For The Year Ended December 31, 1993
TRANSFERS
BALANCE TO LIMITED NET BALANCE
BEGINNING UNITS INCOME ENDING
------------- ---------- ----------- -------------
GENERAL PARTNERS $ (887,151.) $ 7O9,653. $ (19,984.) $ (197,482.)
LIMITED PARTNERS (5,765,442.) (709,653.) (729,368.) (7,204,463.)
------------- ---------- ----------- -------------
TOTALS $ (6,652,593.) $ -0- $ (749,352.) $ (7,401,945.)
============= ========== =========== =============
<FN>
SEE ACCOUNTANTS REPORT LETTER AND NOTES TO FINANCIAL STATEMENTS
6
MALITZ, WEINSTEIN & RUBIN CO. CERTIFIED PUBLIC ACCDUNTANTS. CLEVELAND, OHIO
Exhibit B
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENT OF REVENUES AND EXPENSES
- INCOME TAX BASIS
For The Year Ended December 31, 1993
INCOME
Rentals $2,177,816.
Excess Operating Charges 1,164,161.
Garage 321,682.
Antenna 128,301.
-----------
Total Income $3,791,960.
OPERATING EXPENSES
Custodial and Manager $264,383.
Elevator Maintenance 112,372.
Insurance 70,304.
Management Fees 230,689.
Office Expense 66,011.
Professional Fees 42,472.
Repairs and Maintenance 630,005.
Supplies (17,382.)
Taxes - Real Estate 258,343.
Taxes - Other 3,430.
Travel 570.
Utilities 881,481.
General Expenses 6,765.
-----------
Total Operating Expenses 2,549,443.
-----------
INCOME BEFORE INTEREST EXPENSE, DEPRECIATION
AND AMORTIZATION $1,242,517.
LESS: Interest Expense 1,214,005.
-----------
INCOME BEFORE DEPRECIATION AND AMORTIZATION $28,512.
LESS: Depreciation And Amortization 777,864.
-----------
NET INCOME FOR THE YEAR $(749,352.)
===========
<FN>
SEE ACCOUNTANTS REPORT LETTER AND NOTES TO FINANCIAL STATEMENTS
7
MALITZ, WEINSTEIN & RUBIN CO. CERTIFIED PUBLIC ACCOUNTANTS. CLEVELAND, OHIO
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS Exhibit C
- INCOME TAX BASIS
For The Year Ended December 31, 1993
CASH GENERATED BY OPERATIONS:
Net Income $(749,352.)
Depreciation and Amortization 777,864.
-----------
Total $ 28,512.
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Current Assets - (Increase) Decrease
Receivables $(8,132.)
Prepaids (1,601.)
Current Liabilities - Increase (Decrease)
Accounts Payable 349,747.
Accrued Expenses and Taxes (42,860.)
-----------
Total 297,154.
-----------
NET CASH PROVIDED BY OPERATIONS $ 325,666.
INVESTING ACTIVITIES -0-
FINANCING ACTIVITIES
Decrease In Debt (325,666.)
-----------
INCREASE (DECREASE) IN CASH $ -0-
CASH BALANCE - BEGINNING 9,162.
-----------
CASH BALANCE - ENDING $ 9,162.
===========
SUPPLEMENTAL DISCLOSURE
Cash Paid During The Year For Interest $1,214,005.
===========
<FN>
SEE ACCOUNTANTS REPORT LETTER AND NOTES TO FINANCIAL STATEMENTS
8
MALITZ, WEINSTEIN & RUBIN CO. CERTIFIED PUBLIC ACCOUNTANTS. CLEVELAND, OHIO
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS Exhibit D
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
- -----------------------------------------
Basis of Accounting
-------------------
The accompanying financial statements have been prepared on the accrual
method of accounting used for federal income tax purposes. Consequently,
certain revenues and expenses are recognized in the determination of income
in different reporting periods than they would be if the financial
statements were prepared in conformity with generally accepted accounting
principles. Although income tax rules are used to determine the timing of
the reporting of revenues and expenses, nontaxable revenues and
nondeductible expenses are included in the determination of net income.
Net Income - Income Tax Basis
-----------------------------
In accordance with the Company's policy, net income - income tax basis
includes nontaxable revenue and nondeductible expenses in addition to taxable
revenue and deductible expenses.
Property and Equipment
----------------------
If an expenditure results in an asset having an estimated useful life that
extends beyond the year of acquisition, the expenditure is capitalized and
depreciated over the estimated useful life of the asset. Building,
improvements, and equipment are recorded at cost and are depreciated using
Straight-Line or Accelerated Cost Recovery Methods as follows:
Buildings 19 Years ACRS - Straight-Line
Building Improvements 10 Years ACRS - Straight-Line
Equipment & Improvements 5 Years ACRS
Accordingly, the depreciation and amortization recorded is not purported to
be an accurate reflection of economic depreciation and amortization.
Adjustments Necessary To Conform With Generally Accepted Accounting
-------------------------------------------------------------------
Principles (GAAP)
-----------------
As stated in the accountants report and previously in Note 1 of the Notes To
Financial Statements, the Company has used various depreciation and
amortization methods which do not conform to generally accepted accounting
principles (GAAP). Had the Company conformed to GAAP the accumulated
depreciation and amortization and partners' Capital accounts would be
adjusted as follows:
BEGINNING ENDING
--------- ------
BALANCE SHEET
Accumulated Depreciation
and Amortization $(3,225,566.) $(3,664,018.)
============= =============
Partners' Capital $(2,613,052.) $(3,023,668.)
============= =============
STATEMENT OF OPERATIONS
Net Income For The Year $(409,940.)
===========
<FN>
SEE ACCOUNTANTS REPORT LETTER AND NOTES TO FINANCIAL STATEMENTS
9
MALITZ, WEINSTEIN & RUBIN CO. CERTIFIED PUBLIC ACCOUNTANTS. CLEVELAND, OHIO
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS Exhibit D
(Continued)
NOTE 2 - TRANSACTIONS WITH RELATED PARTY
- -----------------------------------------
The property, which is located in Toledo, Ohio is managed by the Mid-America
Management Corporation.
Accounts Payable in the amount of $1,890,218. are due to the management
company.
NOTE 3 - MORTGAGE PAYABLE
- --------------------------
The land and buildings owned by the Company are encumbered by mortgages
securing two notes; one to New York Life Insurance (due in 1999) and the
other to Realty Refund Trust (due in 1994). One of the limited partners of
the partnership is also Chairman of the Board of Realty Refund Trust.
The Company has a fixed monthly payment of $128,362. To the extent that
this amount will not satisfy the New York Life monthly payment and interest
on the Realty Refund Note, the shortfall will be added to the Realty Refund
note.
SEE ACCOUNTANTS REPORT LETTER AND NOTES TO FINANCIAL STATEMENTS
10
RIVERVIEW TOWER LIMITED PARTNERSHIP
LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
As At December 31, 1994
11
MALITZ, WEINSTEIN & RUBIN CO.
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
December 31, 1994
INDEX
AUDITORS' REPORT
BALANCE SHEET EXHIBIT A
As At December 31, 1994
ANALYSIS OF PARTNERS' EQUITY SCHEDULE A-1
For The Year Ended December 31, 1994
STATEMENT OF OPERATIONS EXHIBIT B
For The Year Ended December 31, 1994
STATEMENT OF CHANGES IN CASH POSITION EXHIBIT C
For The Year Ended December 31, 1994
NOTES TO FINANCIAL STATEMENTS EXHIBIT D
SCHEDULE OF PROPERTY AND EQUIPMENT EXHIBIT E
For The Years Ended December 31, 1992, 1993 and 1994
SCHEDULE OF ACCUMULATED DEPRECIATION AND AMORTIZATION EXHIBIT F
OF PROPERTY AND EQUIPMENT
For The Years Ended December 31, 1992, 1993 and 1994
12
MALITZ, WEINSTEIN & RUBIN CO.
CERTIFIED PUBLIC ACCOUNTANTS
3690 ORANGE PLACE-SUITE 250
CLEVELAND, OHIO 44122-4422
---------------
Telephone (216) 464-9560
---------------
Telecopier (216) 464-2887
CHARLES P. MALITZ, CPA ROBERT W. BIATS
MILTON J. WEINSTEIN, CPA JENNIFER L. GARRIS
KIMBALL E. RUBIN, CPA GARY L. FERBER, CPA
STEVEN MARTON, CPA (1937-1990)
STEPHEN L. WOLF, CPA
KEVIN B. ROTENBERRY, CPA
February 24, 1995
INDEPENDENT AUDITOR'S REPORT
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
We have audited the accompanying balance sheet of Riverview Tower Limited
Partnership, A Limited Partnership, as of December 31, 1994, and the related
statements of partners' equity, operations and changes in cash position for the
year then ended. These financial statements and the schedules referred to
below are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedules based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating overall financial statement
presentation. We believe that our audit provides 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 Riverview Tower Limited Part-
nership, A Limited Partnership, as at December 31, 1994, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The information contained in Exhibits E and F is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. This information has been subjected to the audit-
ing procedures applied in our 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.
/s/ Malitz, Weinstein & Rubin Co.
13
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
BALANCE SHEET Exhibit A
As At December 31, 1994
ASSETS
-------
Cash $ 150.
Accounts Receivable 183.
Escrow Receivable 163,377.
Prepaid Expenses 24,248.
Property and Equipment 16,705,077.
Less: Accumulated Depreciation and
Amortization (4,102,470.)
-------------
TOTAL ASSETS $ 12,790,565.
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
LIABILITIES
Accounts Payable $ 320,001.
Accrued Interest and Real Estate Taxes 360,280.
Security Deposits 2,482.
Mortgage Payable 11,937,438.
-------------
Total Liabilities $ 12,620,201.
-------------
PARTNERS' EQUITY - SCHEDULE A-1 170,364.
-------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 12,790,565.
14
Schedule A-1
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
ANALYSIS OF PARTNERS' EQUITY
For The Year Ended December 31, 1994
BALANCE NET BALANCE
BEGINNING INCOME ENDING
----------- ----------- ------------
GENERAL PARTNERS $ (403,183.) $ 283,918. $ (119,265.)
LIMITED PARTNERS (2,620,485.) 2,910,114. 289,629.
TOTALS $(3,023,668.) $ 3,194,032. $ 170,364.
15
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS Exhibit B
For The Year Ended December 31, 1994
INCOME
Rentals $ 4,314,541.
Excess Operating and Tax Charges 2,656,961.
Garage 382,448.
Antenna 142,841.
Total Income $ 7,496,791.
OPERATING EXPENSES
Custodial and Manager $ 302,628.
Elevator Maintenance 114,630.
Insurance 71,410.
Management Fees 120,000.
Office Expense 67,249.
Professional Fees 43,406.
Repairs and Maintenance 900,374.
Supplies (29,272.)
Taxes - Real Estate 271,360.
Taxes - Other 2,659.
Travel 155.
Utilities 854,087.
General Expenses 4,891.
Total Operating Expenses 2,723,577.
INCOME BEFORE INTEREST EXPENSE, DEPRECIATION
AND AMORTIZATION $ 4,773,214.
LESS: Interest Expense 1,140,730.
INCOME BEFORE DEPRECIATION AND AMORTIZATION 3,632,484.
LESS: Depreciation and Amortization 438,452.
NET INCOME FOR THE YEAR $ 3,194,032.
16
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN CASH POSITION Exhibit C
For The Year Ended December 31, 1994
CASH GENERATED BY OPERATIONS:
Net Income $ 3,194,032.
Depreciation Amortization 438,452.
--------------
Total 3,632,484.
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Current Assets - Increase (Decrease)
Receivables $ 323.
Prepaids and Escrows (4,987.)
Current Liabilities - Increase (Decrease)
Accounts Payable (1,772,043.)
Security Deposits 2,482.
Accrued Expenses and Taxes (46,094.)
--------------
Total (1,820,319.)
NET CASH PROVIDED BY OPERATIONS 1,812,165.
INVESTING ACTIVITIES -0-
FINANCING ACTIVITIES
Decrease In Debt (1,821,177.)
INCREASE (DECREASE) IN CASH $ (9,012.)
CASH BALANCE - BEGINNING 9,162.
CASH BALANCE - ENDING $ 150.
SUPPLEMENTAL DISCLOSURE
Cash Paid During The Year For Interest 1,112,312.
17
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS Exhibit D
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------
Accounting Method
-----------------
The Partnership keeps its records and prepares its financial statements on
the accrual basis.
Property and Equipment
----------------------
The fixed assets are recorded at cost and are being depreciated as follows:
Buildings 40 Years Straight-Line
Building Improvements 40 Years Straight-Line
Equipment and Improvements 10 Years Straight-Line
NOTE 2 - TRANSACTIONS WITH RELATED PARTY
- ----------------------------------------
The property, which is located in Toledo, Ohio is managed by the Mid America
Management Corporation.
Accounts Payable in the amount of $137,244. are due to the management
company.
18
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS Exhibit D
(Continued)
NOTE 3 - MORTGAGE PAYABLE
The land and buildings owned by the Company are encumbered by mortgages
securing two notes; one to New York Life Insurance (due in 1999) and the
other to Realty Refund Trust (due in 1996). One of the limited partners of
the partnership is also Chairman of the Board of Realty Refund Trust.
The Company has a fixed monthly principal and interest payment of $74,195.
on the first mortgage plus an interest only payment on the Realty Refund
note at 10% per annum. In addition, the Company has agreed to pay $850,000.
against the outstanding amount due on January 1, 1995 and January 1, 1996.
The Company has also agreed to deposit with Realty Refund Trust in escrow
all excess cash flow. The funds will be made available for tenant improve-
ments or third party leasing commissions. The amount due for 1994 is
$304,291.
NOTE 4 - LEASE AMENDMENT AND EXTENSION
- --------------------------------------
On June 2, 1994, the Company modified its lease with Owens-Corning
Fiberglass Corporation as follows:
The tenant has extended its lease to December 31, 1996 and agreed to a lease
extension fee of $5,000,000. payable June, 1994, January, 1995 and January,
1996. There were also modifications of lease and operating expense payment
terms.
19
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
SCHEDULE OF PROPERTY AND EQUIPMENT Exhibit E
For The Years Ended December 31, 1992, 1993 and 1994
1992
----
BALANCE
AT BEGINNING ADDITIONS BALANCE AT END
OF PERIOD AT COST RETIREMENTS OF PERIOD
------------ ------------ ------------ ------------
Building $13,771,320. $13,771,320.
Building Improvements 1,473,220. 1,473,220.
Equipment 551,143. 551,143.
Land 887,000. 887,000.
------------ ------------ ------------ ------------
Total $16,682,683. $ -0-. $ -0-. $16,682,683.
============ ============ ============ ============
1993
----
Building $13,771,320. $13,771,320.
Building Improvements 1,473,220. 1,473,220.
Equipment 551,143. $ 22,394. 573,537.
Land 887,000. 887,000.
------------ ------------ ------------ ------------
Total $16,682,683. $ 22,394. $ -0-. $16,705,077.
============ ============ ============ ============
1994
----
Building $13,771,320. $13,771,320.
Building Improvements 1,473,220. 1,473,220.
Equipment 573,537. 573,537.
Land 887,000. 887,000.
------------ ------------ ------------ ------------
Total $16,705,077. $ -0-. $ -0-. $16,705,077.
============ ============ ============ ============
SEE ACCOUNTANTS REPORT LETTER AND NOTES TO FINANCIAL STATEMENTS
20
RIVERVIEW TOWER LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
SCHEDULE OF ACCUMULATED DEPRECIATION AND AMORTIZATION Exhibit F
OF PROPERTY AND EQUIPMENT
For The Years Ended December 31, 1992, 1993 and 1994
1992
----
BALANCE ADDITIONS
AT BEGINNING CHARGED TO BALANCE AT END
PERIOD COSTS & EXPENSES RETIREMENTS OF PERIOD
------------ ---------------- ------------ --------------
Building $2,233,494. $344,283. $2,567,777.
Building Improvements 231,217. 36,816. 268,033.
Equipment 333,522. 56,234. 389,756.
----------- --------- ---------- -----------
Total $2,798,233. $437,333. $ -0- $3,225,566.
=========== ========= ========== ===========
1993
----
Building $2,567,777. $344,283. $2,912,060.
Building Improvements 268,033. 36,816. 304,849.
Equipment 389,756. 57,353. 447,109.
----------- --------- ---------- -----------
Total $3,225,566. $438,452. $ -0- $3,664,018.
=========== ========= ========== ===========
1994
----
Building $2,912,060. $344,283. $3,256,343.
Building Improvements 304,849. 36,816. 341,665.
Equipment 447,109. 57,353. 504,462.
----------- --------- ---------- -----------
Total $3,664,018. $438,452. $ -0- $4,102,470.
=========== ========= ========== ===========
SEE ACCOUNTANTS REPORT LETTER AND NOTES TO FINANCIAL STATEMENTS
21
THE RIVERVIEW TOWER LIMITED PARTNERSHIP
FINANCIAL REPORT
DECEMBER 31, 1995
22
THE RIVERVIEW TOWER LIMITED PARTNERSHIP
CONTENTS
- --------------------------------------------------------------------------------
Page
----
AUDITORS' REPORT ON THE FINANCIAL STATEMENTS 1
FINANCIAL STATEMENTS
Balance sheet 2
Statement of income 3
Statement of partners' equity 4
Statement of cash flows 5
Notes to financial statements 6-7
AUDITORS' REPORT ON ACCOMPANYING INFORMATION 8
ACCOMPANYING INFORMATION
Schedules of property and equipment 9
Schedules of accumulated depreciation and amortization
of property and equipment 10
23
[LOGO] [HAUSSER & TAYLOR LETTERHEAD]
Partners
The Riverview Tower Limited Partnership
Cleveland, Ohio
Independent Auditors' Report
----------------------------
We have audited the accompanying statement of assets, liabilities and
partners' deficit - income tax basis of The Riverview Tower Limited Partnership
as of December 31, 1995, and the related statements of revenues and expenses,
partners' deficit, and cash flows - income tax basis for the year then ended.
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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As described in the notes to the financial statements, the Partnership's
policy is to prepare its financial statements on the accounting basis used for
income tax purposes, which is a comprehensive basis of accounting other than
generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the assets, liabilities, and partners' deficit of The
Riverview Tower Limited Partnership as of December 31, 1995, and its revenues
and expenses, partners' deficit, and cash flows for the year then ended, on the
basis of accounting described in the Organization and Summary of Significant
Accounting Policies.
/s/ Hausser & Taylor
Cleveland, Ohio
February 23, 1996
-1-
24
THE RIVERVIEW TOWER LIMITED PARTNERSHIP
BALANCE SHEET
December 31, 1995
-----------------
ASSETS
- ------
RENTAL PROPERTY
Land $ 887,000
Building and improvements 15,264,693
Equipment 598,257
-----------
Total 16,749,950
Less accumulated depreciation 4,518,193
-----------
Net rental property $12,231,757
OTHER ASSETS
Cash 150
Accounts receivable 44,533
Prepaid expenses 22,846
Real estate escrow 149,017
Capital reserve escrow 214,291
-----------
Total other assets 430,837
-----------
$12,662,594
===========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
LIABILITIES
Accounts payable $ 148,316
Accrued interest and real estate taxes 365,075
Security deposits 2,482
Mortgage notes payable 10,413,780
-----------
Total liabilities $10,929,653
PARTNERS' EQUITY 1,732,941
-----------
$12,662,594
===========
The accompanying notes are an integral part of these financial statements.
-2-
25
THE RIVERVIEW TOWER LIMITED PARTNERSHIP
STATEMENT OF INCOME
Year Ended December 31, 1995
----------------------------
INCOME
Rental income $3,631,044
Garage 390,413
Antenna 154,855
Excess operating and other pass through charges 1,925,473
----------
Total income $6,101,785
EXPENSES
Custodial and manager expenses 180,286
Depreciation and amortization 415,723
Elevator maintenance 123,746
Insurance 70,302
Interest expense 944,283
Management fees 120,000
Office expense and miscellaneous 128,220
Office salaries 55,132
Professional fees 34,623
Repairs and maintenance 743,561
Security expense 22,419
Sellers' fee 90,000
Supplies 36,462
Taxes - payroll 15,726
Taxes - personal property 2,427
Taxes - real estate 286,871
Travel 1,696
Utilities 1,267,731
----------
Total expenses 4,539,208
----------
NET INCOME $1,562,577
==========
The accompanying notes are an integral part of these financial statements.
-3-
26
THE RIVERVIEW TOWER LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' EQUITY
Year Ended December 31, 1995
----------------------------
Balance Net Balance
Beginning Income Distributions Ending
--------- ------ ------------- ------
GENERAL PARTNERS $ (119,265) $ 208,344 $ - $ 89,079
LIMITED PARTNERS 289,629 1,354,233 - 1,643,862
------------ ----------- ----------- -----------
TOTAL $ 170,364 $ 1,562,577 $ - $ 1,732,941
============ =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
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27
THE RIVERVIEW TOWER LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
Year Ended December 31, 1995
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,562,577
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization $ 415,723
Changes in assets and liabilities:
Increase in accounts receivable (44,350)
Decrease in prepaid expenses 1,402
Decrease in escrow receivables (199,931)
Decrease in accounts payable (171,685)
Increase in accrued interest and taxes 4,795
Total adjustments ------- 5,954
---------
Net cash provided by operating activities 1,568,531
CASH FLOWS FROM INVESTING ACTIVITIES
Building improvements and equipment purchases (44,873)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (1,523,658)
---------
NET CHANGE IN CASH --
CASH - BEGINNING OF YEAR 150
---------
CASH - END OF YEAR $ 150
=========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 944,283
The accompanying notes are an integral part of these financial statements.
-5-
28
THE RIVERVIEW TOWER LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Purpose - The Riverview Tower Limited Partnership is an Ohio limited
partnership formed for the purpose of owning, leasing and operating an
office building in Toledo, Ohio. The Partnership commenced operations
on July 26, 1985.
B. Use of 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.
C. Concentration Account - An affiliate of the general partner utilizes a
concentration account for the various properties it manages. In this
way excess cash for all properties may be invested on a short term
basis and cash disbursements made on behalf of each separate
partnership are funded when necessary.
D. Property and Improvements - The building and related improvements are
being depreciated on straight-line or accelerated cost recovery
methods over periods dictated by statutory requirements.
E. Income Taxes - No provision for income taxes is necessary because any
income or loss is includible in the tax returns of the partners.
NOTE 2. MORTGAGE NOTES PAYABLE
The land and building owned by the Partnership are encumbered by
mortgages securing two notes; one to New York Life Insurance (due in
1999) and the other to Realty Refund Trust (due in 1996). One of the
limited partners of the Partnership is also Chairman of the Board of
Realty Refund Trust.
The Partnership has a fixed monthly principal and interest (at 6.05%)
payment of $74,195 on the first mortgage plus an interest only payment
on the Realty Refund note at 10% per annum. In addition, the
Partnership has agreed to pay $850,000 against the outstanding amount
due on January 1, 1996.
Principal payments on the mortgage notes payable as of December 31,
1995 are as follows:
1996 $ 7,854,792
1997 756,263
1998 803,308
1999 999,417
Total ----------
$ 10,413,780
==========
The fair value of the Partnership's long-term debt is estimated based
on borrowing rates currently available to the Partnership for bank
loans with similar terms and maturities and approximates the carrying
value.
-6-
29
THE RIVERVIEW TOWER LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. TRANSACTIONS WITH RELATED PARTY
The property is managed by the Mid-America Management Corporation.
Accounts receivable in the amount of $41,405 are due from the
management company.
The Partnership is obligated to pay a management fee to Mid-America
Management Corporation for certain services with respect to the
operations of the Partnership. The amount of the fee included in
expense for the year ended December 31, 1995 is $120,000.
NOTE 4. OPERATING LEASES
The Partnership's operating revenue is principally obtained from
tenants through rental payments as provided for under noncancelable
operating leases. The tenant leases typically provide for fixed
minimum rent and reimbursement of real estate taxes and operating
costs.
The following is a schedule of minimum future rentals on noncancelable
operating leases as of December 31, 1995 for the next five years:
1996 $ 2,418,850
1997 137,660
1998 42,700
1999 19,540
2000 19,200
$ ---------
Total 2,637,950
=========
NOTE 5. LEASE AMENDMENT AND EXTENSION
On June 2, 1994, the Partnership modified its lease with Owens-Corning
Fiberglas Corporation as follows:
The tenant has extended its lease to December 31, 1996 and agreed to a
lease extension fee of $5,000,000 payable as follows:
June 1994 $ 2,000,000
January 1995 1,500,000
January 1996 1,500,000
Total $ ---------
5,000,000
=========
There were also modifications of lease and operating expense payment
terms.
NOTE 6. SUBSEQUENT EVENTS
The Partnership's principal tenant has not renewed its lease and is
expected to vacate the premises during 1996.
The Partnership has listed the building with a broker and is
attempting to dispose of the property.
-7-
30
[LOGO] [HAUSER & TAYLOR LETTERHEAD]
Partners
The Riverview Tower Limited Partnership
Cleveland, Ohio
Our audit was made for the purpose of forming an opinion of the basic
financial statements for the year ended December 31, 1995, taken as a whole. The
accompanying information is presented for purposes of additional analysis and is
not a required part of the basic financial statements. The information has been
subjected to the auditing procedures applied in our 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.
The supplemental information for 1994 and 1993 which follows was audited by
other accountants whose report dated February 25, 1995, indicated that the
supplemental information is fairly stated in all material respects.
/s/ Hausser & Taylor
Cleveland, Ohio
February 23, 1996
-8-
31
THE RIVERVIEW TOWER LIMITED PARTNERSHIP
SCHEDULES OF PROPERTY AND EQUIPMENT
Years Ended December 31, 1995, 1994, and 1993
---------------------------------------------
1995
------------------------------------------------------------
Balance
At Beginning Additions Balance At
of Period At Cost Retirements End of Period
---------- -------- ----------- -------------
Building $13,771,320 $13,771,320
Building improvements 1,473,220 $ 20,152 1,493,372
Equipment 573,537 24,721 598,258
Land 887,000 887,000
---------- --------- ----------- ----------
Total $16,705,077 $ 44,873 $ -- $16,749,950
========== ========= =========== ==========
1994
------------------------------------------------------------
Building $13,771,320 $13,771,320
Building improvements 1,473,220 1,473,220
Equipment 573,537 573,537
Land 887,000 887,000
---------- --------- ----------- ----------
Total $16,705,077 $ -- $ -- $16,705,077
========== ========= =========== ==========
1993
------------------------------------------------------------
Building $13,771,320 $13,771,320
Building improvements 1,473,220 1,473,220
Equipment 551,143 $ 22,394 573,537
Land 887,000 887,000
---------- --------- ----------- ----------
Total $16,682,683 $ 22,394 $ -- $16,705,077
========== ========= =========== ==========
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32
THE RIVERVIEW TOWER LIMITED PARTNERSHIP
SCHEDULES OF ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY AND EQUIPMENT
Years Ended December 31, 1995, 1994, and 1993
---------------------------------------------
1995
------------------------------------------------------------
Additions
Balance Charged To
At Beginning Costs and Balance At
of Period Expenses Retirements End of Period
---------- -------- ----------- -------------
Building $ 3,256,343 $ 344,283 $ 3,600,626
Building improvements 341,665 37,320 378,985
Equipment 504,462 34,120 538,582
---------- --------- ----------- ----------
Total $ 4,102,470 $ 415,723 $ -- $ 4,518,193
========== ========= =========== ==========
1994
------------------------------------------------------------
Building $ 2,912,060 $ 344,283 $ 3,256,343
Building improvements 304,849 36,816 341,665
Equipment 447,109 57,353 504,462
---------- --------- ----------- ----------
Total $ 3,664,018 $ 438,452 $ -- $ 4,102,470
========== ========= =========== ==========
1993
------------------------------------------------------------
Building $ 2,567,777 $ 344,283 $ 2,912,060
Building improvements 268,033 36,816 304,849
Equipment 389,756 57,353 447,109
---------- --------- ----------- ----------
Total $ 3,225,566 $ 438,452 $ -- $ 3,664,018
========== ========= =========== ==========
-10-