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HomeMy WebLinkAboutAudit The University Tower1 THE UNIVERSITY TOWER SCHEDULE OF OPERATING REVENUE AND CERTAIN EXPENSES ' FOR THE YEAR ENDED MAY 31, 1994 1 1 1 1 1 1 1700 Pacific Avenue, Suite 1400 Telephone 214 922 8040 Dallas, Texas 75201-4698 Price Waterhouse to Report of Independent Accountants To the Partners of Lodgeeo Properties Limited We have audited the accompanying schedule of operating revenue and certain expenses of the University Tower (the "Property') for the year ended May 31, 1994. This schedule is the responsibility of the Property's management. Our responsibility is to express an opinion on this schedule 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 schedule of operating revenue and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the schedule. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall schedule presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying schedule of operating revenue and certain expenses was prepared on the basis described in Note 1 and is not intended to be a complete presentation of the Property's revenues and expenses. In our opinion, the schedule of operating revenue and certain expenses audited by us presents fairly, in all material respects, the operating revenue and certain expenses of the University Tower, on the basis described in Note 1, for the year ended May 31, 1994, in conformity with generally accepted accounting principles. July 7, 1994 THE UNIVERSITY TOWER SCHEDULE OF OPERATING REVENUE AND CERTAIN EXPENSES FOR THE YEAR ENDED MAY 31, 1994 Operating revenue: Dormitory Hotel, food and beverage Dormitory activity, processing and maintenance fees Other Certain expenses (Note 1): Dormitory cost of sales Hotel cost of sales Dormitory food expense lIotel food and beverage expense General and administrative Marketing Telephone expense Energy costs Real estate taxes and insurance Maintenance and property operations Management fees Operating revenue in excess of certain expenses The accompanying notes are an integral part of this schedule. S 3,164,878 879,329 447,547 141 A.. 4,656,253 ,3?9 54R 383,992 Sb3,l3tp 31-2-245r 419,901 JL4,70& 6i51 3,39,671 77,834 152,566 403,947 209,128 432,529 122,728 3,019,244 S 1,637,009 THE UNIVERSITY TOWER MAY 31, 1994 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ' ACCOUNTING POLICIES The accompanying schedule of operating revenue and certain expenses relates to the operations ' of the University Tower (the "Property" or "Dormitory") located in College Station, Texas. The Property is currently owned by Lodgeco Properties, Ltd. ("Lodgeco"). The 17 story tower portion of the Property was constructed in 1985, and the 2 story complex portion was ' constructed in 1963 and upgraded in 1989-1990. For the year ended May 31, 1994 the Property consisted of 579 dormitory spaces and 91 hotel rooms. Lodgeco has initiated proceedings which may ultimately culminate in the Texas Dormitory Finance Authority, Inc. ' holding the debt for the Property. Basis of presentation ' Certain expenses which may not he comparable to the expenses expected to be incurred in the proposed future operations of the Dormitory have been excluded under the assumption that the potential transaction described above will be consummated. Expenses excluded consist of depreciation of the building and improvements, interest expense on certain debt incurred by the Lodgeco to acquire and develop the property, and amortization of expenses not directly ' related to the proposed future operations of the Dormitory. Revenue and expense recognition ' The accompanying schedule of operating revenue and certain expenses has been prepared on the accrual basis of accounting. ' Revenue from the leases is recognized over the term of the lease. Leases are operating and are generally for a term of nine months. Revenue from dormitory activity, processing and maintenance fees, parking fees and telephone service is recognized when received. ' Hotel revenue is recorded daily on a check-in basis. All other hotel revenue is recognized when earned. 1 2. RELATED PARTY TRANSACTIONS tFor the year ended May 31, 1994, the University Tower incurred $122,728 in charges from related parties for fees related to the management of the Property. THE UNIVERSITY TOWER MAY 31, 1994 3. FUTURE MINIMUM RENTALS UNDER OPERATING LEASES As of July 7, 1994, the future lease minimum revenue under noncancelable operating leases covering 563 spaces for the year ended May 31, 1995 is as follows: Dormitory $ 3,286,968 Dormitory activity, processing and maintenance fees 188,025 Parking 61,876 Phone 49,505 Other 1,270 $ 3,587,644 No leases have been signed for any periods beginning after May 31, 1995. 4. COMMITMENTS AND CONTINGENCIES The Dormitory leases certain equipment under operating leases. Future minimum lease commitments are as follows: 1995 $ 72,406 1996 47,579 1997 25,435 1998 18,473 1999 and thereafter 6,060 $ 169,953 6 THE UNIVERSITY TOWER MAY 31, 1994 5. SPACE CONFIGURATION (Unaudited) Beginning in August 1994, the Property will be discontinuing its hotel operation to focus strictly on student housing. As a result, the floors which had previously been designated for hotel usage will be converted to dormitory space. The cost of the renovations is expected to total approximately $221,000. All disbursements related to the renovation made prior to May 31, 1994 were capitalized and therefore do not affect the accompanying schedule of operating revenue and expenses. At the completion of the renovation, it is anticipated that the following changes will occur in the amount of dormitory space which will be available which will increase scheduled rental revenues in the aggregate by $1,950,450. The lease rental per space is the nine month median rental amount for each room type (including a food plan) and is subject to variation. Lease Rental Room Tyne Change in Spaces Amount Tower Garden 22 $ 5,825 Tower Garden Suite 2 $ 7,475 Tower Triple (3) $ 5,075 Tower Suite 6 $ 7,925 Tower Double (28) $ 6,475 Tower Double 2N/3S 30 $ 6,175 Deluxe Tower Double 90 $ 6,875 Four Plex Double 40 $ 5,625 Dorm House Double (2) $ 6,175 Dorm House Triple (3) $ 5,075 Dorm House Deluxe 4 $ 69975 Embassy Triple 24 $ 5,625 Embassy Double 64 $ 7,175 Embassy Double Deluxe 10 $ 8,175 Embassy Double Deluxe Suite 10 $ 9,675 Embassy Parlor 20 $ 7,715 286