Item 1. Business
Raines Road, L.P. ("Registrant"), is a Delaware limited partnership organized on December 16, 1988, pursuant to the provisions of the Delaware Revised Uniform Limited Partnership Act, Sections 17-101-17-1109, Title 6. The General Partner of Registrant is 222 Raines, Ltd., a Tennessee limited partnership, whose general partners are Steven D. Ezell, Michael A. Hartley and 222 Partners, Inc.
The Registrant's primary business is to acquire, develop and sell certain undeveloped real properties located in Memphis, Tennessee (the "Property"). The Registrant's investment objectives are preservation of capital and capital appreciation through the passage of time, growth in the surrounding areas, and the development of the Property prior to resale.
Financial Information about Industry Segments
The Registrant's activity is within one industry segment and geographical area. Therefore, financial data relating to the industry segment and geographical area is included in Item 6 - Selected Financial Data.
Narrative Description of Business
At December 31, 1998, the Registrant was holding approximately 200 acres of partially developed land on Raines Road in Memphis, Tennessee, adjacent to the Memphis International Airport. The Property is zoned for a wide variety of light industrial, warehouse, office-warehouse and distribution uses. All utilities, including water, sewer, electricity and natural gas, are available to the Property.
Phase I of the infrastructure development was completed in 1990 and included construction and improvement of Prescott Road. The total cost was approximately $460,000. Phase II was completed in 1992 and consisted of extending Raines Road 5,000 feet from Prescott Road through the Property to Tchulahoma Road. Phase II also included clearing and rough-grading 168 acres of the Property and removing 1.25 million cubic yards of dirt. The cost of Phase II was approximately $1 million.
Phase III includes construction and improvement of Tchulahoma Road through a portion of the Property. It is the General Partners' intention at this time to only improve Tchulahoma Road as sites contiguous to it are sold.
Competition
The general partner believes that the Property provides strong competition for purchasers or developers of land in the Memphis Airport Area. There are a number of tracts of competitive industrial land in the area, each offering similar pricing to the Registrant. The general partner believes that the Property is competitive due to its location, access and low cost to develop.
The majority of the proceeds used to purchase the Property were from a $4,700,000 promissory note (the "Lender Financing") maturing on December 31, 2001 to Raines Lenders, L.P. (the "Lender"), an affiliated partnership sharing the same general partner. The principal balance accrues interest at a simple interest rate of 12% per annum. Prior to maturity, the Registrant is not required to make any payments with respect to the Lender Financing, except upon the sale, exchange or condemnation of all or any portion of the Property. From sale proceeds, the Lender receives a priority return of interest and principal, and 50% of the "Net Revenues", if any. Net revenues, as defined by the participating Loan Agreement, represent the difference between cash proceeds earned and the following, in this order: 1) accrued but unpaid interest and "Applicable Principal Balances"; 2) accrued preferred return (12% on the net offering proceeds of the Registrant) and 3) the "Applicable Equity Balance". The "Applicable Principal Balance" is a fixed dollar amount assigned in the loan agreement to the Property on a per acre basis to represent a portion of the original principal amount of the Lender Financing. From property sales in 1990, 1991, 1994 and 1997, the cumulative "Applicable Principal Balance" due to the Lender is $1,677,707 and is payable from future sale proceeds, after all accrued interest is paid.
The Registrant has no employees. Program management services are being provided under a contractual agreement with Landmark Realty Services Corporation, an affiliate of the general partner.
Item 2.
Item 2. Properties
As of December 31, 1998, Registrant owned approximately 200 acres of partially developed land in Memphis, Tennessee. See Item 1 above for more detailed description. Registrant is subject to a first mortgage held by Raines Lenders, L.P., an affiliated partnership sharing the same general partner.
Item 3.
Item 3. Legal Proceedings
Registrant is not a party to, nor is any of Registrant's property the subject of, any material legal proceedings.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
The security holders of Registrant did not vote on any matter during the fiscal year covered by this report. PART II
Item 5.
Item 5. Market for Registrant's Units of Limited Partnership Interest and Related Security Holder Matters
There is no established market for the Units, and it is not anticipated that any will exist in the future. The Registrant commenced an offering to the public on April 3, 1989 for 1,875 Units of Limited Partnership Interests. The offering of $1,875,000 was fully subscribed on September 12, 1989. As of February 28, 1999, there were 181 holders of record of the 1,875 Units of Limited Partnership Interests.
There were no distributions made to Unit holders during 1998, 1997 and 1996. There are no material restrictions upon Registrant's present or future ability to make distributions in accordance with the provisions of Registrant's Limited Partnership Agreement, other than the obligations to Raines Lenders, L.P., as described below.
Item 6.
Item 6. Selected Financial Data
For the Year Ended December 31 1998 1997 1996 1995 1994
Total revenues $ 46,746 654,127 11,266 40,628 552,717 Net loss (655,018) (8,627) (648,034) (678,429) (207,082) Net loss per limited partner unit (349.34) (4.60) (345.62) (361.83) (110.44) Total assets 5,860,039 6,111,799 6,054,735 6,195,673 7,345,269 Note payable- private - - - 100,000 367,716 Note payable to affiliate 4,700,000 4,700,000 4,700,000 4,700,000 4,700,000 Accrued interest payable to affiliate 3,077,634 2,524,934 2,695,434 2,131,434 2,159,600
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Sales
There were no sales during 1998 and 1996.
In 1997, the Registrant sold approximately 30 acres for a distribution site. Of the $2.2 Million in sale proceeds, $1.1 million was escrowed for development of the sale site and adjacent land,and $734,500 was paid to The Lender on The Lender financing.
Comparative Analysis
Except for the land sales in 1997, the overall operations of the Registrant have not changed significantly over the last three years, although there have been some fluctuations within accounts. The fluctuations in interest income are due to the Registrant's changing cash balances. The 1998 credit to cost of land and improvements sold is due to overestimated development costs related to the 1997 sales. Property tax expense has fluctuated through the years due to city and county reassessments of the property's value. The Registrant has worked diligently with consultants to lower the property tax expense and has been successful in past years. The 1998 property tax expense reflects the amount billed the Registrant. These amounts have not been paid and are under dispute. General and administrative expenses include consulting fees in 1997 and 1996. The 1998 decrease in general & administrative expenses is due to lower property tax consulting fees. Loan costs were fully amortized in the second quarter of 1996 explaining the decline in amortization expense.
Financial Condition and Liquidity
At February 28, 1999, the Registrant has approximately $7,432 available in funds to cover operating expenses for 1999. Operating expenses are primarily accounting fees which includes audit and tax, and program management service fees. The cash reserves are low. If a sale of the property occurs, then funds may be available from sale proceeds. The General Partner expects the Registrant to meet operational needs through affiliated loans if necessary.
In 1990, 1991, 1994, and 1997 the Registrant retained a portion of the sale proceeds for development and operations and did not use all the proceeds to make interest or principal payments to the Lender. The Registrant made interest payments of $734,500, $600,000 and $1,027,454 on the Lender financing in 1997, 1995 and 1991, respectively. The Registrant's and Lender's joint general partner believes that using sales proceeds for development and distributing only net available cash to the Lender was contemplated by the loan agreement. However, the loan agreement is ambiguous on this use of funds; therefore, this treatment could constitute a default on the loan agreement. In such an event the Lender is required to foreclose the loan and accelerated the amounts due. Currently, the Lender has not foreclosed or accelerated the amounts due under the loan agreement.
From property sales in 1990, 1991, 1994 and 1997, the cumulative Applicable Principal balance due to the Lender is $1,677,707 and is payable from future sale proceeds, after all accrued interest is paid.
Year 2000
In 1998, the Partnership initiated a plan ("Plan") to identify, and remediate "Year 2000" issues within each of its significant computer programs and certain equipment which contain microprocessors. The Plan is addressing the issue of computer programs and embedded computer chips being unable to distinguish between the year 1900 and the year 2000, if a program or chip uses only two digits rather than four to define the applicable year. The Partnership has divided the Plan into five major phases- assessment, planning, conversion, implementation and testing. After completing the assessment and planning phases earlier year, the Partnership is currently in the conversion, implementation, and testing phases. Systems which have been determined not to be Year 2000 compliant are being either replaced or reprogrammed, and thereafter tested for Year 2000 compliance. The Plan anticipates that by mid-1999 the conversion, implementation and testing phases will be completed. Management believes that the total remediation costs for the Plan will not be material to the operations or liquidity of the Partnership.
The Partnership is in the process of identifying and contacting critical suppliers and other vendors whose computerized systems interface with the Partnership's systems, regarding their plans and progress in addressing their Year 2000 issues. The Partnership has received varying information from such third parties on the state of compliance or expected compliance. Contingency plans are being developed in the event that any critical supplier or customer is not compliant.
The failure to correct a material Year 2000 problem could result in an interruption in, or failure of, certain normal business activities or operations. Such failures could materially and adversely affect the Partnership's operations, liquidity and financial condition. Due to the general uncertainty inherent in the Year 2000 problem, resulting in part from the uncertainty of the Year 2000 readiness of third-party suppliers and customers, the Partnership is unable to determine at this time whether the consequences of Year 2000 failures will have a material impact on the Partnership's operations, liquidity or financial condition. Item 8.
Item 8. Financial Statements and Supplementary Data
RAINES ROAD, L.P. (A Limited Partnership)
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
INDEX
Page Number
Independent Auditors' Report
Financial Statements Balance Sheets Statements of Operations Statements of Partners' Deficit Statements of Cash Flows Notes to Financial Statements
Independent Auditors' Report
The Partners Raines Road, L.P.:
We have audited the accompanying balance sheets of Raines Road, L.P. (a limited partnership) as of December 31, 1998 and 1997, and the related statements of operations, partners' deficit, and cash flows for each of the years in the three-year period ended December 31, 1998. 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 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 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 Raines Road, L.P. at December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the years in the three- year period ended December 31, 1998, in conformity with generally accepted accounting principles.
KPMG LLP
Nashville, Tennessee January 22, 1999
RAINES ROAD, L.P. (A Limited Partnership)
Balance Sheets
December 31, 1998 and 1997
See accompanying notes to financial statements.
RAINES ROAD, L.P. (A Limited Partnership)
Statements of Operations See accompanying notes to financial statements.
RAINES ROAD, L.P. (A Limited Partnership)
Statements of Partners' Deficit
Years ended December 31, 1998, 1997 and 1996
See accompanying notes to financial statements.
RAINES ROAD, L.P. (A Limited Partnership)
Statements of Cash Flows Years ended December 31, 1998, 1997 and 1996
1998 1997 1996
Cash flows from operating activities: Net loss $ (655,018) (8,627) (648,034) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Amortization - - 7,981 Cost of land and improvements held for investment(note 3) 32,995 (1,224,398) (635) Cost of land and improvements sold - 1,448,336 - Decrease (increase) in restricted cash 239,429 (223,957) (554) Increase in accounts receivable from affiliate (5,000) - - Increase (decrease) in accrued interest payable 552,700 (170,500) 561,580 Increase (decrease) in accounts payable (221,982) 217,126 3,621 Increase in accrued property taxes 72,540 19,065 41,895
Net cash provided (used) by operating activities 15,664 57,045 (34,146)
Cash flows from financing activities- Payment of note payable-private - - (100,000)
Net increase (decrease) in cash 15,664 57,045 (134,146) Cash at beginning of year $ 98,678 41,633 175,779 Cash at end of year $ 114,342 98,678 41,633
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest $ 11,300 734,500 6,991
See accompanying notes to financial statements.
RAINES ROAD, L.P. (A Limited Partnership)
Notes to Financial Statements
December 31, 1998 and 1997
(1) Summary of Significant Accounting Policies
(a) Organization
Raines Road, L.P. (the Partnership) is a Delaware limited partnership organized on December 16, 1988 to acquire several contiguous, undeveloped tracts of land in Memphis, Tennessee for the purpose of developing and selling parcels of real estate. The General Partner is 222 Raines, Ltd., whose general partners are Steven D. Ezell, Michael A. Hartley, and 222 Partners, Inc. The Partnership prepares financial statements and income tax returns on the accrual method of accounting. The financial statements include only those assets, liabilities and results of operations which relate to the Partnership.
(b) Estimates
Management of the Partnership has made estimates and assumptions to prepare these financial statements in accordance with generally accepted accounting principles. These estimates include the determination of the estimated fair value of the Partnership's land and improvements in accordance with the provisions of SFAS No. 121. Actual results could differ from those estimates.
(c) Cash
Cash belonging to the Partnership is combined in an account with funds from other partnerships related to the general partner.
(d) Land and Improvements Held for Investment
Land and improvements held for investment are recorded at cost and include approximately 200 acres at December 31, 1998 and 1997. Interest expense on the note payable to affiliate insurance and property taxes were capitalized as carrying costs of the property during the development period. RAINES ROAD, L.P. (A Limited Partnership)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies (continued)
(d) Land and Improvements Held for Investment(continued)
Costs to hold land, including interest, insurance, and property taxes are charged to expense once the develop- ment of the property is substantially complete. Land improvement costs incurred and capitalized include development costs expended subsequent to the acquisition of a tract of land.
The Partnership adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" in 1996. SFAS No. 121 requires that long-lived assets to be disposed of be reported at the lower of the carrying amount or fair value less estimated costs to sell. The fair value of the assets can be determined externally, using appraisals, or internally using discounted future net cash flows. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets less estimated costs to sell. Impairment is recognized through the establishment of an allowance for impairment with a corresponding charge to operations. Losses upon the sale of the assets are charged to the allowance. Based upon management's analysis of discounted future net cash flows, the Partnership's land and improvements held for investment does not meet definitions of impairment under SFAS No. 121. Accordingly, land held for investment is recorded at cost with no allowance for impairment necessary. The adoption of SFAS No. 121 did not have an impact on the Partnership's financial position, results of operations, or liquidity.
RAINES ROAD, L.P. (A Limited Partnership)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies (continued)
(e) Income Recognition
Income from sales of land and improvements held for investment is generally recorded on the accrual basis when the buyer's financial commitment is sufficient to provide economic substance to the transaction, and when other criteria of SFAS No. 66 "Accounting for Sales of Real Estate" are satisfied. For sales of real estate where both cost recovery is reasonably certain and the collectibility of the contract price is reasonably assured, but the transaction does not meet the remaining requirements to be recorded on the accrual basis, profit is deferred and recognized under the installment method, which recognizes profit as collections of principal are received. If developments subsequent to the adoption of the installment method occur which cause the transaction to meet the requirements of the full accrual method, the remaining deferred profit is recognized at that time. Any losses on sales of real estate are recognized at the time of the sale.
(f) Income Taxes
No provision has been made in the financial statements for Federal or state income taxes, since such taxes are the responsibilities of the partners.
Annually, the partners receive, from the Partnership, IRS Form K-1's, which provide them with their respective share of taxable income or losses, deductions, and other tax related information. The only difference between the tax basis and reported amounts of the Partnership's assets and liabilities relates to the valuation of land held for investment. For income tax purposes certain costs were capitalized as additional land improvement costs.
(g) Partnership Allocations
Net profits, losses and distribution of cash flow of the Partnership are allocated to the Partners in accordance with the Partnership agreement as follows:
RAINES ROAD, L.P. (A Limited Partnership)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies (continued)
(g) Partnership Allocations(continued)
Partnership net profits are allocated first to any partner with a negative balance in their capital account, determined at the end of the taxable year as if the Partnership had distributed cash flow, in proportion to the negative capital balance account of all partners until no partner's capital account is negative. Net profit allocations are then made to the limited partners up to the difference between their capital account balances and the sum of their adjusted capital contributions (capital balance, net of cumulative cash distributions in excess of preferred returns - 12% annual cumulative return on capital contributed). Any remaining net profit allocations are then made to the limited partners until the taxable year in which cumulative profits to the limited partners equal their adjusted capital contribution plus an unpaid preferred return (12% annual cumulative return on capital contributed). Net profits are then allocated to the general partner until the ratio of the general partner's capital account balance to the capital account balances, in excess of adjusted capital contributions and unpaid preferred return, of all limited partners is 27% to 73%. Thereafter, profits are generally allocated 27% to the general partner and 73% to the limited partners. Net losses are allocated to the partners in proportion to their positive capital accounts.
Partnership distributions are allocated 99% to the limited partners and 1% to the general partner in an amount equal to their preferred return (12% annual, cumulative return on capital contributed), 99% to the limited partners and 1% to the general partner until the limited partners have received an amount equal to their adjusted capital contributions, and then 73% to the limited partners and 27% to the general partner.
Cumulative unpaid preferred returns are $2,137,500 and $1,912,500 at December 31, 1998 and 1997, respectively.
RAINES ROAD, L.P. (A Limited Partnership) Notes to Financial Statements
(1) Summary of Significant Accounting Policies (continued) (h) Comprehensive Income
Effective January 1, 1998, the Partnership adopted SFAS No. 130, "Reporting Comprehensive Income". SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements and requires that all components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. Comprehensive income is defined as the change in equity of a business enterprise, during a period, associated with transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. During the years ended December 31, 1998 and 1997, the Partnership had no components of other comprehensive income. Accordingly, comprehensive income for each of the years was the same as net loss.
(2) Related Party Transactions
The General Partner and its affiliates have been actively involved in managing the Partnership. Affiliates of the General Partner receive fees and commissions for performing certain services. Expenses incurred for these services are as follows: 1998 1997 1996 Accounting fees $ 2,100 2,100 2,100 Property management fee 3,000 3,000 3,000 Real estate sales commission - 88,000 - Accounts receivable from affiliate 5,000 - -
(3) Restricted Cash
At December 31, 1998 and 1997, the Partnership had restricted cash balances of $140,769 and $380,198, respectively, to be used to fund property improvements consisting of road and utility work. In 1998, the Partnership received excess escrowed development funds from the escrow agent. The development payable related to these escrowed funds, also overestimated, was reduced by the excess cash received. Cost of land sold and land improvements, also effected by this development, was reduced. This restricted cash securs a letter of credit in the same amount to ensure that the required developments are made. RAINES ROAD, L.P. (A Limited Partnership)
Notes to Financial Statements
(4) Land and Improvements Held for Investment
The components of land and improvements held for investment at December 31, are as follows: 1998 1997 Land and carrying costs $ 3,947,078 3,947,078 Land improvements 1,652,850 1,685,845
$ 5,599,928 5,632,923
Aggregate cost of land and improvements held for investment for federal income tax purposes was $7,392,325 and $7,430,492 at December 31, 1998 and 1997, respectively.
(5) Note Payable - Affiliate
The note payable to affiliate represents a $4,700,000 note payable to Raines Lenders, L.P. (Lender), an affiliate sharing the same General Partner. The note accrues simple interest at an annual rate of 12% plus additional interest equal to 50% of "net revenues", as defined in the Participating Loan Agreement. The note is secured by a mortgage on land and improvements held for investment by the Partnership and by a security interest in any cash reserves or investment securities held by the Partnership. Interest and principal payments become due upon the sale of the collateral or any portion thereof to the extent cash is available, but no later than December 31, 2001. In 1998, there were no land sales and the Partnership paid $11,300 in interest payments to the Lender. In 1997, the Partnership sold 26.6 acres of land, receiving net proceeds of $628,719 and paid $734,500 in interest payments to the Lender. Due to anticipated future requirements for additional development and operations, the Partnership retained certain proceeds from sales and did not pay the additional amounts of interest and/or applicable principal balance to the Lender. The Partnership's and Lender's joint general partner believes that retaining sales proceeds for development and distributing only net available cash to the Lender was contemplated by the note agreement. However, the note agreement does not
RAINES ROAD, L.P. (A Limited Partnership)
Notes to Financial Statements
(5) Note Payable - Affiliate(continued)
explicitly authorize this use of funds; therefore, this treatment could constitute a default on the note agreement. In such an event, Lender is required to foreclose the note and accelerate the amounts due. To date, the Lender has not foreclosed or accelerated the amounts due under the note agreement. Of the $4,700,000 total principal balance outstanding, the applicable principal balance due to Lender is $1,677,707 at December 31, 1998 and 1997.
Interest expense associated with the note payable to affiliate in 1998, 1997, and 1996 was $564,000.
(6) Fair Value of Financial Instruments
At December 31, 1998 and 1997, the Partnership had financial instruments including cash, restricted cash, accrued interest payable, accounts payable, accrued property taxes, and notes payable. The carrying amounts of cash, restricted cash, accounts payable, and accrued property taxes approximate their fair value because of the short maturity of those financial instruments.
The determination of the estimated fair values of the note payable and the related accrued interest payable to affiliate was not practicable as the note agreement does not provide for a predictable cash payment stream.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
Registrant does not have any directors or officers. 222 Raines, Ltd. is the general partner. Steven D. Ezell, Michael A. Hartley and 222 Partners, Inc. are the general partners of the general partner and as such have general responsibility and ultimate authority in matters affecting Registrant's business.
The general partners of 222 Raines, Ltd. are as follows:
Steven D. Ezell
Steven D. Ezell, age 46, is a general partner of 222 Raines, Ltd. He is the President and sole shareholder of 222 Partners, Inc. He has been an officer of 222 Partners, Inc. from September 17, 1986 through the current period. Mr. Ezell is President and 50% owner of Landmark Realty Services Corporation. For the prior four years, Mr. Ezell was involved in property acquisitions for Dean Witter Realty Inc. in New York City, most recently as Senior Vice President. Steven D. Ezell is the son of W. Gerald Ezell.
Michael A. Hartley
Michael A. Hartley, age 39, is a general partner of 222 Raines, Ltd. He is the Secretary/Treasurer and a Vice President of 222 Partners, Inc. He has been an officer of 222 Partners, Inc. from September 17, 1986 through the current period. Mr. Hartley is Vice President and 50% owner of Landmark Realty Services Corporation. Prior to joining Landmark in 1986, Mr. Hartley was Vice President of Dean Witter Realty Inc., a New York-based real estate investment firm.
222 Partners Inc.
222 Partners, Inc. was formed in September, 1986 and serves as general partner for several other real estate investment limited partnerships. The directors of 222 Partners, Inc. are W. Gerald Ezell, Steven D. Ezell, and Michael A. Hartley.
Other directors of 222 Partners, Inc. are as follows:
W. Gerald Ezell, age 68, serves on the Board of Directors of 222 Partners, Inc. Until November, 1985, Mr. Ezell had been for over 20 years an agency manager for Fidelity Mutual Life Insurance Company and a registered securities principal of Capital Analysts Incorporated, a wholly owned subsidiary of Fidelity Mutual Life Insurance Company.
Item 11.
Item 11. Executive Compensation
During 1998, Registrant was not required to and did not pay remuneration to any executives, partners of the general partner or any affiliates, except as set forth in Item 13 of this report, "Certain Relationships and Related Transactions."
The general partner does participate in the profits, losses and distributions of the Registrant as set forth in the Partnership Agreement.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of February 28, 1999 no person or "group" (as that term is used in Section 13(d) (3) of the Securities Exchange Act of 1934) was known by the Registrant to beneficially own more than five percent of the Units of Registrant.
As of the above date, the Registrant knew of no officers or directors of 222 Partners, Inc. that beneficially owned any of the units of the Registrant.
There are no arrangements known by the Registrant, the operation of which may, at a subsequent date, result in a change in control of the Registrant.
Item 13.
Item 13. Certain Relationships and Related Transactions
During 1997, Landmark Realty Services Corp., an affiliate of the Registrant, received a real estate commission of $88,000. No other affiliated entities have earned compensation for services from the Registrant in excess of $60,000. For a listing of all miscellaneous transactions with affiliates which were less than $60,000 refer to Note 2 to the Financial Statements in Item 8.
The Registrant borrowed $4,700,000 from Raines Road, L.P., an affiliated partnership, during 1989. Accrued interest on such loan was $3,077,634 at December 31, 1998. In 1998, a $11,300 payment was made on the accrued interest of the Lender Financing.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) Financial Statements See Financial Statements Index in Item 8. hereof.
(2) Financial Statement Schedule See Financial Statement Schedule Index at page 25 hereof.
(3) Exhibits
3 Amended and restated Certificate and Agreement of Limited Partnership, incorporated by reference to Exhibit A to the Prospectus of Registrant dated April 3, 1989 filed pursuant to Rule 424(b) of the Securities and Exchange Commission.
10A Participating Loan Agreement by and among Raines Lenders, L.P. and the Registrant, incorporated by reference to Exhibit 10.1 to Registrant's Form S- 18 Registration Statement as filed on January 3, 1989.
10B Deed of Trust, Assignment of Leases and Security Agreement by and among Raines Lenders, L.P. and the Registrant, incorporated by reference to Exhibit 10.2 of the Registrant's Form S-18 Registration Statement as filed on January 3, 1989.
10C Participating Mortgage Note of Owner to Lender incorporated by reference to Exhibit 10.3 to Registrant's Form S-18 Registration Statement as filed on January 3, 1989.
22 Subsidiaries-Registrant has no subsidiaries.
27 Financial Data Schedule
(b) No reports on Form 8-K have been filed during the last quarter of 1998.
Financial Statement Schedule Filed Pursuant to Item 14(a)(2):
RAINES ROAD, L.P. (A Limited Partnership)
ADDITIONAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1998
INDEX
Page Number
Additional financial information furnished pursuant to the requirements of Form 10-K:
Financial Statement Schedule -
Independent Auditors' Report S-1
Schedule III - Real Estate and Accumulated Depreciation S-2
All other Schedules have been omitted because they are inapplicable, not require or the information is included in the Financial Statements or notes thereto.
Independent Auditors' Report
The Partners Raines Road, L.P.:
Under date of January 22, 1999, we reported on the balance sheets of Raines Road, L.P. as of December 31, 1998 and 1997, and the related statements of operations, partners' deficit, and cash flows for each of the years in the three-year period ended December 31, 1998. These financial statements and our report thereon are included elsewhere herein. In connection with our audit of the aforementioned financial statements, we have also audited the related financial statement schedule as listed in the accompanying index. This financial statement schedule is the responsibility of the Partnership's management. Our responsibility is to express an opinion on this financial statement schedule based on our audit.
In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
KPMG LLP
Nashville, Tennessee January 22, 1999
S-1
Encumbrances listed above do not include accrued interest.
Schedule III
RAINES ROAD, L.P. (A Limited Partnership)
Real Estate and Accumulated Depreciation (continued)
December 31, 1998
1998 1997 1996
(1) Balance at beginning of period $ 5,632,923 5,856,861 5,856,226 Additions during period: Improvements - 1,224,398 - Other - carrying costs (32,995) - 635 ------- --------- ---------
- 1,224,398 635 Deductions during period: Cost of real estate sold - 1,448,336 -
------- --------- --------- - 1,448,336 -
Balance at end of period $ 5,599,928 5,632,923 5,856,861
(2) Aggregate cost for Federal income tax purposes $ 7,392,325 7,430,492 7,641,267
See accompanying independent auditors' report.
SIGNATURES
Pursuant to the requirements 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.
RAINES ROAD, L.P. By: 222 Raines, Ltd. General Partner
DATE: March 31, 1999 By: /s/ Steven D. Ezell General Partner
DATE: March 31, 1999 By: /s/ Michael A. Hartley General Partner
By: 222 Partners, Inc. General Partner
DATE: March 31, 1999 By: /s/ Michael A. Hartley Secretary/Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
RAINES ROAD, L.P. By: 222 Raines, Ltd. General Partner
DATE: March 31, 1999 By: /s/ Steven D. Ezell General Partner
DATE: March 31, 1999 By: /s/ Michael A. Hartley General Partner
By: 222 Partners, Inc. General Partner
DATE: March 31, 1999 By: /s/ Michael A. Hartley Secretary/Treasurer
Supplement Information to be Furnished with Reports filed Pursuant to Section 15(d) of the Act by Registrant Which Have Not Registered Securities Pursuant to Section 12 of the Act:
No annual report or proxy material has been sent to security holders.
Exhibits filed to Item 14(a)(3):
RAINES ROAD, L.P. (A Delaware Limited Partnership)
Exhibit Index
Exhibit
3 Amended and Restated Certificate and Agreement of Limited Partnership, incorporated by reference to Exhibit A to the Prospectus of Registrant dated April 3, 1989 filed pursuant to Rule 424(b) of the Securities and Exchange Commission.
10A Participating Loan Agreement by and among Raines Road, L.P. and Raines Lenders, L.P., incorporated by reference to Exhibit 10.1 to registrant's Form S-18 Registration Statement as filed on January 3, 1989.
10B Deed of Trust, Assignment of Leases and Security Agreement by and among Raines Lenders, L.P. and the Registrant, incorporated by reference to Exhibit 10.2 of the Registrant's Form S-18 Registration Statement as filed on January 3, 1989.
10C Participating Mortgage Note of Raines Road, L.P. to Raines Lenders, L.P., incorporated by reference to Exhibit 10.3 to Registrant's Form S-18 Registration Statement as filed on January 4, 1989.
22 Subsidiaries-Registrant has no subsidiaries.
27 Financial Data Schedule