The partnership never attained the profit goals it sought; acquired only nine properties; and sold or deeded back seven of them to lenders, the report states.
KFP was one of dozens of limited partnerships formed in South Florida over the years with the goal of making a profit on commercial, industrial and office real estate investments.
KFP 85 Ltd. emerged in 1984 as a publicly registered company backed by some of the venerable names in the industry--Theodore J. Pappas, 74, chairman of Miami-based Keyes Co.; Fred Stanton Smith, 74, retired Keyes Co. president; along with Pappas' son, Timothy D. Pappas, 44, Keyes Co. vice president and principal of KPA Inc., the KFP 85 managing general partner.
Up until the year ended in 1995, the partnership managed an estimated $7.1 million in assets. KFP closed 1999 with net income of about $1.7 million on total revenue of $6.4 million.
Timothy Pappas did not respond to requests from GlobeSt.com for comment in this article, but one of the last documents he filed with the SEC offers clear insight into the reason why the partnership closed a relationship that lasted 16 years, as well as describing the highs and lows of the South Florida real estate market.
"During much of the partnership's operation, there was a buyer's market with respect to commercial leasing, requiring rent incentives to attract and retain tenants," the report states. "Together, all of these factors had a negative impact on the cumulative results of operations and cash flows of the partnership."
About a month ago, the partnership, which operated throughout one of the worst periods of time in the history of South Florida's real estate community, officially closed the books. Over the past year, the partnership disposed all remaining assets and liabilities.
The annual report the company filed on Feb. 4 tells a story about a partnership that initially raised $8 million by selling 8,000 units of limited partnership interest to 676 unit owners, struggled and then had to write-down the carrying value of several properties in its investment portfolio.
One passage in the report explains about a time that many real estate professionals in South Florida would rather forget. The passage recalled a period of overbuilding in South Florida, which led to an all-out recession by the late 1980s and continued for several years.
It recalled bank failures and takeovers by the Resolution Trust Corp., the government asset-disposition agency. It also recalled the subsequent sale of foreclosed commercial real estate that created below-market prices.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
