DIVALL INSURED INCOME PROPERTIES 2 LIMITED PARTNERSHIP - FORM 8-K - EX-99.1 - FOURTH QUARTER 2011 NEWSLETTER OF THE PARTNERSHIP - February 15, 2012
DiVall Insured Income Properties 2, L.P.
FOURTH QUARTER OF 2011 DISTRIBUTION
The Partnership is distributing $640,000 for the Fourth Quarter of 2011, which is $13.83 per unit. This includes $196,000 ($4.24 per unit) from adjusted operating and other investment cash flows, which is $54,000 ($1.17 per unit) less than the original budgeted amount due primarily to the China Super Buffet vacancy; and $444,000 ($9.59 per unit) from the sale of the Dennys property in November of 2011, which we did not budget at the beginning of the year.
ADDITIONAL FINANCIAL INFORMATION CAN BE ACCESSED
For further Quarterly 2011 unaudited financial information, see the Partnerships interim financial reports filed on Form 10-Q. A copy of the First, Second and Third Quarter 2011 10-Qs and other public reports can be viewed and printed free of charge at the Partnerships website at www.divallproperties.com or at the SECs website at www.sec.gov. The Partnerships 2011 Annual Report on Form 10-K is anticipated to be filed with the SEC by March 31, 2012, at which time the report can also be accessed via the websites.
Between $1,591.75 and $1,442.57 is the range of cumulative total distributions per unit from the first unit sold to the last unit sold before the offering closed (3/90), respectively. (Distributions are from both adjusted cash flow from operations and net cash activity from financing and investing activities).
PARTNERSHIP OUTLOOK for 2012
As of December 31, 2011, 12 of the 13 Partnership properties were leased and all operating tenants were continuing to abide by the terms of their leases. The Applebees lease is set to expire during the fourth quarter of 2012, and Management projects that the lease will be extended. Management plans to continue its objective to preserve capital and sustain property values, while selectively working to dispose of weaker investment properties, such as the Dennys, Phoenix, AZ property which was sold in November of 2011 (see Property Sold and Other Property Highlights on page 2 for further information).
Based on current projections, the Partnership anticipates distributing an aggregate of $1.07 million ($23.12 per unit) from adjusted operating cash flows and net cash activity from investing and financing activities for the four quarters of 2012. $210,000 ($4.54 per unit) is projected to be distributed in relation to each of the first through third quarters estimated activity and $440,000 ($9.51 per unit) is projected to be distributed for the fourth quarter estimated activity (includes anticipated fourth quarter of 2012 Buyers Note balloon payment collection of $233,000 from the 2009 installment sale of the Grand Forks, ND property).
FORWARD LOOKING STATEMENTS
Forward-looking statements that were true at the time made may ultimately prove to be incorrect or false. Investors are cautioned not to place undue reliance on forward-looking statements, which reflect the Partnerships managements view only as of February 1, 2012, the date this newsletter was sent for printing and mail assembly The Partnership undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results. Factors that could cause actual results to differ materially from any forward-looking statements made in this newsletter include changes in general economic conditions, changes in real estate conditions and markets, inability of current tenants to meet financial obligations, inability to obtain new tenants upon the expiration of existing leases, and the potential need to fund tenant improvements or other capital expenditures out of operating cash flow.
OTHER PROERTY HIGHTLIGHTS
QUESTIONS & ANSWERS
Your distribution correspondence for the First Quarter of 2012 is scheduled to be mailed on May 15, 2012.
According to IRS regulations, Management is not required to mail K-1s until April 15th, 2012. The 2011 K-1s are projected to be mailed in March of 2012.
Managements had estimated the December 31, 2011 Net Unit Value of each interest of the Partnership to approximate $305, as noted in the letter mailed to investors on February 15, 2012. Please note that the estimated year-end NUV should be adjusted (reduced) for any subsequent property sale(s) or applicable impairment write-downs during the following year. As with any valuation methodology, the General Partners methodology is based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could derive a different estimated NUV. Accordingly, with respect to the estimated NUV, the Partnership can give no assurance that:
Please visit the Investor Relations page at the Partnership website at www.divallproperties.com or the SEC website at www.sec.gov to print a copy of the report(s) or contact Investor Relations.
In the offering materials from the late 1980s, sponsored by the former general partners, there was a representation (but no guarantee) that the Partnership would seek to insure rents from vacant properties. Although, there was some initial availability of very restrictive and limited (one year) insurance, that availability vanished in the early 1990s.
In other words, the former general partners were fast and loose with professing the concept of Insured and the next and final partnership they sold did not use the term in the investments name.
Please e-mail your specific question to Diane Conley at firstname.lastname@example.org by Wednesday, April 4, 2012 or visit the Investor Relations page at www.divallproperties.com.
Please mail or fax to DiVall Investor Relations a signed letter stating your new address and telephone number. Updates cannot be accepted over the telephone or via voicemail messages.
You can reach DiVall Investor Relations at the address and/or number(s) listed below.
DIVALL INSURED INCOME PROPERTIES 2 L.P.
ADJUSTED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 and 2009
Non-GAAP Financial Disclosure
Adjusted cash flow provided by operating activities is a non-GAAP financial measure that represents cash flow provided by operating activities on a GAAP basis adjusted for certain timing differences and cash flow advances (deferrals) as described above. Management believes that adjusted cash flow from operating activities is a useful supplemental measure for assessing the cash flow generated from the Partnership's period and is used in evaluating quarterly cash distributions to limited partners. Adjusted cash flow from operating activities should not be considered as an alternative for cash flow from operating activities computed on a GAAP basis as a measure of our liquidity.