10-K 1 form10k-43289.txt 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended September 30, 2001 Commission File Number 1-8893 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP -------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 59-2501059 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2501 S. Ocean Drive Hollywood, Florida 33019 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (305) 927-3080 Securities registered pursuant to Section 12(b) of the Act: None Name of Each Exchange on which Registered - None Title of Each Class: Limited Partnership Units Securities registered pursuant to Section 12(g) of the Act: None Indicate by checkmark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and YES [ X ] NO [ ] (2) has been subject to such filing requirements for the past 90 days. YES [ X ] NO [ ] 1 Indicate by checkmark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K (ss.. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [XX] The aggregate market value of the limited partnership units held by non-affiliates of Registrant computed by reference to the last reported sale price of the Units over-the-counter on December 31, 2001 was approximately $1,507,000. 2 Item 1. Business (a) General Development Of Business Royal Palm Beach Colony, Limited Partnership (the "Partnership" or the "Registrant") was organized under the Delaware Revised Uniform Limited Partnership Act. The Partnership is a successor to Royal Palm Beach Colony, Inc., (the "Predecessor Company") a Florida corporation organized in 1963. Pursuant to a Plan of Complete Liquidation (the "Plan"), the Predecessor Company transferred all of its assets, subject to all of its liabilities, to the Partnership in exchange for a number of partnership units ("Units") exactly equal to the number of shares of common stock of the Predecessor Company outstanding on July 11, 1985 (the "Effective Date"). On the Effective Date, the Units were distributed to the former holders of common stock of the Predecessor Company on the basis of one (1) Unit for each share of common stock of the Predecessor Company. The Partnership, as a successor to the Predecessor Company, has registered its Units under Section 12 (b) of the Securities Exchange Act of 1934. Under the Amended Agreement of Limited Partnership of the Registrant, the term of the Partnership expires December 31, 2005, unless extended by vote of a majority of the partnership units. Trading in Partnership Units The Units are currently trading over-the-counter under the symbol "RPAMZ." Results of Liquidation Activities The Partnership's principal business has been to operate, manage and dispose of the assets which were transferred to it on the Effective Date by the Predecessor Company. Since the Effective Date of the Predecessor Company's liquidation, the Partnership has engaged in a program of asset disposition resulting in the sale of assets for an aggregate gross consideration of $79,909,000. The partnership has declared aggregate distributions of $32,520,128 ($7.45) per unit since inception through December 31, 2001, including $897,101 ($0.20 per Unit) during the fiscal year ended September 30, 2001. See Item 5 - Market for the Registrant's Common Equity and Related Stockholder Matters "Prior Distributions." As of December 31, 2001, the Partnership retained and was holding for sale: 3 (1) a 50% interest in 1.6 acres of commercial property in the "Crestwood" tract in the Village of Royal Palm Beach under option for sale for a price which would generate gross proceeds to the Partnership of approximately $375,000. (2) a tract of approximately 20 acres in the Crestwood multi-family tract in the Village of Royal Palm Beach, which is under contract for sale for $1,462,000. Factors Affecting Future Operations and Distributions The availability of cash for distribution in the future will depend upon a variety of factors not currently determinable. Management has now substantially completed the development and sale of most of the Partnership's remaining land in Palm Beach County, and its last three parcels are currently under contract. However, there can be no assurance that all or any of such contracts will close, and although the Partnership expects to receive future collections of contingent receivables relating to a prior sale of a utility plant, it is currently uncertain when additional cash will become available for distribution. See Item 2 - "Properties," for a discussion of potential sources of and anticipated timing of the receipt of revenue which will affect future distributions. (b) Financial Information About Industry Segments Not applicable. (c) Narrative Description Of The Business Regulation Development and sales operations of the Partnership or by potential purchasers of real estate from the Partnership have been subject to regulation by a number of local, state and federal agencies concerning the nature and extent of improvements, and compliance with zoning regulations, building codes, health requirements and environmental protection. The Partnership believes that it has been in substantial compliance with all such laws and regulations which affect its properties and that it has developed the properties to the extent required by contract or law. If such laws or regulations are amended, in particular those concerning environmental protection, the cost of compliance could be increased. Reference is made to the discussion concerning the impact of land use regulatory 4 issues affecting salability of certain properties remaining in Palm Beach County in Item 2 -- Properties -- "Acreage in the Vicinity of the Village." Competition The real estate business conducted by the Partnership is highly competitive. The Partnership's sales of its remaining land will compete with surrounding developments, and it is possible that competitive forces could result in one or more purchasers under the remaining contracts for sale of the Partnership's properties determining not to close. Impact of General Economic Conditions The development and sale of real estate occurs within a historically cyclical market, and is significantly influenced by general economic conditions. Recent reductions in interests rates could have a favorable impact on the decision of purchasers for the Partnership's remaining properties to close on contracts previously executed and on the number of new utility connections installed in the Village of Royal Palm Beach, which in turn will have an impact on the contingent receivables payable under the Utilities contract. See "Utility Contingent Receivable" below. If significant interest rate increases occur in the future, the real estate market could suffer as a result. Personnel: As of December 31, 2001, Stein Management Company, Inc. ("Steinco")the Managing General Partner, employed 1 person, who acts as an administrator of its books and records. The balance of the Partnership's affairs are carried out by independent brokers, contractors and other consultants under the direction of the Board of Directors of Steinco. See Item 10. Office Facilities: The Partnership's executive headquarters have been located at 2501 S. Ocean Drive, Hollywood, Florida 33019 but will be re-located to 3225 Aviation Avenue, Suite 700, Coconut Groves, Florida 33133 on or about February 28, 2002. The previous are owned by an affiliate of Hasam Realty Limited Partnership ("Hasam L.P."), a general partner of the Partnership, which made available to the Partnership as an accommodation without charge. The new premises will be located in a portion of premises occupied by Randy Reiger, who has been the broker for 5 numerous real estate sales by the Partnership, and who is making such space available without cost to the Partnership. Item 2. Properties Palm Beach County, Florida The Crestwood Tract Although the Partnership had previously sold nearly all of its land in the Village, it reacquired in 1992, through foreclosure of a defaulted purchase money mortgage, the 165 acre Crestwood Tract of undeveloped land in the Village. When reacquired, the Crestwood Tract was zoned and preliminary approval had been obtained for the development of 172 single-family homesites (the "Single Family Tract") and 625 multi-family units. The Crestwood Tract is bisected by a principal Village road and has access to all utilities, but was otherwise undeveloped with the exception of the existence of portions of a drainage system. Through December 31, 2001, all of the Crestwood Tract had been sold with the exception of the 1.6 acres of commercial property under option and the 20 acre tract intended for multi-family residential construction described in Item 1 above. In order to enhance the market value of the Crestwood Tract, the Partnership obtained the rezoning of an approximately 14 acre portion of the Crestwood Tract previously zoned for multi-family housing to permit the Partnership to develop a 14 acre shopping center site. The Partnership received site-plan approval in mid-1996, and executed an agreement to sell the entire 14 acre portion to an unaffiliated shopping center developer ("Purchaser") in two phases. The closing on the first phase of the Commercial Site, occurred in February, 1997, resulting in gross proceeds of approximately $1,538,757. The second phase consists of two additional parcels in the 14 acre portion rezoned as described above, which adjoin the shopping center site. The purchaser is seeking the appropriate approvals from the Village. The first such parcel was sold during the year for a gross sale price of $500,000. Subject to receipt of such approvals, the Partnership anticipates closing on the remaining parcel in May 2002 for gross proceeds of approximately $375,000 but the timing of closing on the second parcel is currently uncertain. 6 Residential Lots Within the Crestwood Tract As a result of management's decision to develop portions of the Crestwood Tract, the Partnership re-planned the configuration of the entire tract. The project included a redesign of the Single Family Tract, and the Partnership received final plat approval to increase to 198 the number of residential lots for development for single family use (hereinafter the "Residential Tract"). "Development," as such term is applied to single-family lots, entails the completion of all necessary zoning, land use, environmental and other regulatory procedures, the installation of roads and utility connections to each lot and the provision of drainage facilities. Between 1995 and 1997, the Partnership completed the off-site and on-site improvements required for the development of 198 lots in the Residential Tract. Through December 31, 2001, the Partnership had sold all of the 198 lots in the Residential Tract but had reacquired 45 such lots upon foreclosure in October, 1999. During the quarter ended March 31, 2000, the Company resold such lots for gross proceeds or $1,316,250 and net proceeds after real estate taxes and brokerage commissions of $1,092,000. In August 1999 the Partnership sold a substantial part of the remainder of the multi-family zoned land (comprising approximately 26 acres) for $2,225,000 in gross proceeds, and approximately $1,886,000 in net proceeds after costs of sale. Previously, in November 1998, the Partnership sold 7.7 acres for net proceeds of $288,000. The Partnership also holds a tract of approximately 20 acres of multi-family zoned property in the Crestwood multi-family tract in the Village of Royal Palm Beach. This property is under contract of sale for a gross selling price of $1,462,000. The closing of this transaction is subject, as were the prior contracts, to due diligence review by the purchaser and, thereafter, to numerous land use and other contingencies and the closing is therefore not expected to occur until approximately April 2002. Proceeds previously received for various sales within the Crestwood tract, and proposed sale prices under previously canceled contracts, do not necessarily constitute a reliable predictor of the proceeds which may be anticipated for sales of the balance of the Partnership's land within the Crestwood area. 7 Utility Contingent Receivable In 1983 the Partnership's Predecessor Company sold to the Village of Royal Palm Beach a water and sewage treatment system servicing the Village. Pursuant to the agreement of sale ("Utility Contract"), the Predecessor company received $2,510,000 on closing, and was entitled to future payments to a maximum of $10,900,000 as future connections, measured by consumption increases, were made to the system over a period ending August, 2001. As of September 30, 2001, $3,742,000 had not been received. The Utility Contract also provided for contingent extension periods aggregating not more than three additional years to compensate for possible future governmental building moratoriums or water use restrictions. The Partnership's consultants have advised it that the term has been extended through 2003 as a result of water usage restrictions imposed by the South Florida Water Management District in 1990 and 1991 and moratorium actions taken by the Village of Royal Palm Beach in 1985 and 1986. The Utility Contract also calls for payments to the Partnership equal to 25% of any "Guaranteed Revenues" (payment by developers to secure guaranteed allocations of plant capacity) collected by the Village to a maximum payment of $500,000, of which $361,000 has been received through September 30,2001. Through December 31, 2001 the Partnership had received total payments of $7,158,000 in "consumption" payments and $361,000 in Guaranteed payments under the Utility Contract, and was entitled to receive approximately $442,000 in January, 2002 in respect of the year 2001. The Utility Contract will expire in 2003. Since the highest annual payment in the ten years ending September 30, 2000 was only $519,000, it is a virtual certainty that the rate of new construction or water consumption in such area will not be sufficient to enable the Partnership to receive the maximum remaining in contingent payments under the Utility Contract prior to the expiration of the contingent payment term. Item 3. Pending Legal Proceedings. There are no pending legal proceedings, other than routine and immaterial litigation incidental to its business, to which the Partnership is a party or to which its property is subject. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. 8 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters The Units currently trade on the over-the-counter market (Symbol RPAMZ). The following table sets forth, for the fiscal periods of the Partnership indicated, the reported high and low closing prices for the Partnership's Units in over-the-counter trading during the fiscal years ended September 30, 2000 and 2001. As of December 31, 2000, based on its records, the Partnership believes that there were a total of approximately 970 holders of Units, including holders acting as nominee for securities brokerage firms and athers. Fiscal Year Ended: September 30, 2000 Quarter High Low ------- ---- --- First 1 1/2 1/2 Second 1 1/64 9/16 Third 1 3/8 3/8 Fourth 11/16 1/2 Fiscal Year Ended: September 30, 2001 Quarter High Low ------- ---- --- First $.65 $.20 Second $.30 $.20 Third $.80 $.35 Fourth $.85 $.10 Prior Distributions The Partnership Agreement requires the Managing General Partner to consider quarterly whether the Partnership has Cash Available for Distribution in respect of the Partnership Units, and to make distributions unless the costs of the distribution would be disproportionately high in relation to the Cash Available for Distribution. "Cash Available for Distribution" in general means the excess cash held by the Partnership over anticipated expenditures and reserves for anticipated or contingent liabilities. The Partnership is not a party to any agreements which would restrict its ability to make future distributions. See Item 1 -- "Factors Affecting Future Operations and Distributions." 9 At the inception of the Partnership, its assets were assigned a tax basis in the hands of the Partnership based upon the net fair market value of the assets transferred from the Predecessor Company as determined by reference to the aggregate market value of the Units at the time of original issuance. Each Unit's pro rata share of such net fair market value resulted in a capital account of $6.31 per Unit, which also became the original tax basis of each Unit in the hands of the original Unitholders. As a result of taxable income and loss and distributions since inception, the capital account and tax basis attributable to each Unit which has remained in the hands of an original Unitholder has been reduced to $0.71 as of September 30, 2001. Each person acquiring a Unit after inception has a tax basis in such Unit equal to the net price paid therefor. Such basis is thereafter increased by such Unit's allocable share of the Partnership's income and decreased by the allocable share of taxable loss and by any cash distributions made. A distribution itself is not a taxable event except to the extent that the distribution reduces the Unitholder's basis below zero. Section 17-607(a) of the Delaware Revised Uniform Limited Partnership Act provides generally that a limited partnership shall not make a distribution to a partner if, after giving effect to the distribution, all liabilities of the partnership exceed the fair value of its assets. A limited partner who receives such a distribution is liable to the limited partnership for the amount thereof, but only if such limited partner knew at the time of the distribution that distribution violated said Section 17-607(a). No claim based on any such wrongful distribution may be made more than three years after such distribution. In the normal course of events, however, the Managing General Partner does not anticipate that the liabilities of the Partnership immediately following any future distribution will ever exceed the fair value of its net assets. See also "Factors Affecting Future Operations and Distributions" under Item 1. The Partnership has declared and paid the following liquidating distributions: Payment Date Amount Per Unit ------------ --------------- April 15, 1986 $ .25 August 15, 1986 .35 December 15, 1986 .40 January 15, 1988 .50 July 15, 1988 .50 January 15, 1989 .50 July 17, 1989 1.00 September 29, 1989 .75 March 30, 1990 .75 July 31, 1990 .50 August 30, 1991 .50 December 15, 1991 .25 December 16, 1992 .25 October 27, 1999 .50 February 17,2000 .25 June, 2001 .20 ----- 7.45 10 Item 6. Selected Financial Data The following is a summary of selected financial data (in thousands of dollars except as to per unit amounts) as of and for the periods ended on the dates indicated:

Since the Partnership's sole business has been the disposition of its assets and the distribution of proceeds to its Unitholders, results in any period are not comparable with any other period and are not indicative of the results which may be anticipated in any future period. See Item 5 -- Prior Distributions (relating to prior returns of capital). 11 Item 7. Management's Discussion And Analysis of Financial Condition And Results of Operations During the fiscal year, the Partnership had gross revenues of $1,074,495 most of which resulted from land sales, as compared with $2,058,211 in 2000 and $8,411,560 in 1999. Net income was $172,422 in 2001, as compared with $280,524 in 2000 and $3,106,905 in 1999. The Partnership's cash balances at any particular point depend primarily on the timing of sales of its real estate, which timing can be affected by numerous factors. See Item 2. Cash was $3,113,800 at September 30, 1999 as a result of the closing of material land sales and decreased to $812,520 as of September 30, 2001 principally as a result of a distributions to Unitholders aggregating $3,364,128 during the year. Cash declined to $515,952 at September 30, 2001 partially as the result of distributions to Unitholders aggregating $897,101 during the year and reduced revenues from land sales. See Financial Information - Statements of Cash Flows. During the current fiscal year, and based upon management's judgment that ordinary operating expenses will not increase, the Partnership anticipates that cash flow and liquidity requirements will be satisfied by existing cash, land sale closings and contingent utility receipts described under the caption "Utility Contingent Receivable" under Item 2 above. Affect of Land Sales on Future Cash Flow The Partnership's future revenues will depend solely upon its ability to develop and/or sell its remaining real estate, and upon receipts from a prior sale of a utility plant. Total net cash flow which might become available for distribution is unpredictable due to uncertain conditions in the South Florida real estate market in which the Partnership's remaining real estate is located, and competition from other owners and developers of real estate in the South Florida market. These conditions will continue to affect the realizable value of the Partnership's remaining land, including decisions by parties holding options on 12 the Partnership's land to exercise such options in whole or in part. The rate of construction in the Village of Royal Palm Beach could also significantly affect future payments to the Partnership under the contract described under the caption "Utility Contingent Receivable" under Item 2 above. Environmental Matters There are no environmental contingencies in respect of the Partnership or its properties. Use of all of the Partnership's properties is subject to compliance with state and county land use regulations relating to environmental matters, which the Partnership takes into account in considering the values of its properties. Results of Operations

Cost of Sales Cost of sales relates to the sales of land as discussed above. This item varies as a result of dissimilar profit margins and income recognition methods on the various sales of land and buildings as discussed above. 13 Selling, Administrative and Other Expenses Selling, general and administrative expenses were $1,334,174 in 1999, decreasing to $585,085 in 2000 and $492,046 in 2001, primarily due to declining sales commission levels resulting from reductions in the volume of real estate sales. Property Taxes Property tax expense decreased materially from 1999 to 2001 because of substantial sales of the Partnership's properties. Income Taxes The Partnership, pursuant to the transitional grandfather rules of the Internal Revenue Code dealing with publicly traded partnerships, reported its income as a Partnership for taxable years through December 31, 1997. The application of the grandfather rules terminated for taxable years commencing after December 31, 1997. Under the Taxpayer Relief Act of 1997, a publicly traded partnership that is currently governed by this provision may elect to continue its Partnership tax status beyond December 31, 1997 by agreeing to pay an annual 3.5% Federal Tax on its gross income for federal income tax purposes (principally revenues less tax cost of land sold). The Partnership has elected to continue its Partnership status beyond December 31, 1997. Selling, general and administrative expenses include federal tax of $9,238, $19,908 and $70,000 for the years ended September 30, 2001, 2000 and 1999, respectively. See Note 6 the Financial Statements included with this report. Item 8. Financial Statements and Supplementary Data Financial Statements and supplementary data are listed under Item 14 herein. Item 9. Disagreements with Accountants on Accounting and Financial Disclosure None 14 PART III Item 10. Directors and Executive Officers of the Registrant The following information is provided with respect to the directors and officers of each general partner of the Registrant.(l)

(1) The general partners of the Partnership are Stein Management Company, Inc. ("Steinco") and Hasam Realty L.P. The general partner of Hasam L.P. is Friedco, L.C., ("Friedco") a Florida limited liability company. Friedco is managed by its four members, Jack, Harold and Leonard Friedland and Marjorie Cowan, who are brothers and sister. Irving Cowan is the husband of Marjorie Cowan. Compliance with Section 16(a) of the Securities Exchange Act of 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the officers and directors of the general partners of the Partnership, and persons who own more than ten percent of the Partnership's Units, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Such officers, directors and greater than ten-percent Unitholders are required by SEC regulations to furnish the Partnership with copies of all Section 16(a) forms they file. No such forms were furnished to the Partnership during fiscal 2001. Based solely on the foregoing the Partnership believes that during fiscal 2001, 15 no purchases or sales of units were made requiring compliance with applicable Section 16(a) filing requirements. Item 11. Executive Compensation During fiscal 2001 officers and directors of Steinco, the managing partner, as a group (3 persons), earned $22,500 in cash compensation. The Partnership Agreement provides that the Partnership will provide and pay for all payroll and other costs of Steinco (to the extent such costs are not paid directly by the Partnership) in connection with the employment of personnel, and the costs of office space, outside clerical and professional assistance, equipment, and other facilities which are ordinary and necessary to the conduct and management of the Partnership's affairs. Since 1994, however, for administrative convenience, all such reimburseable expenses have been paid directly by the Partnership. Steinco's sole function is to serve as the Managing General Partner and it does not conduct any other operations. Other than the foregoing, the Managing General Partner is not entitled to any compensation in respect of the discharge of its obligations under the Partnership Agreement. Hasam L.P., the other General Partner, is not entitled to compensation of any nature under the Partnership Agreement but is entitled to reimbursement for such expenses as it may reasonably incur in the discharge of its ordinary and necessary obligations as a General Partner. Item 12. Security Ownership of Certain Beneficial Owners and Management The following table sets forth as of December 30, 2000 information concerning (i) all persons who are known to the Registrant to be the beneficial owner of more than 5% of the Units and (ii) the beneficial ownership of Units of directors and officers of each General Partner of the Registrant. Amount Beneficially Percent of Name and Address Owned (a) Class ------------------ ----------- ----- Harold Friedland 712,417 (1) 15.8% 636 Old York Road #210 Jenkintown, PA 19046 Jack Friedland 1,155,834 (1)(2) 25.8% 111 Regatta Drive Jupiter, FL 33477 16 Leonard Friedland 1,170,196 (1)(3) 26.1% 6530 Allison Road Miami Beach, FL 33131 Marjorie Cowan 1,057,929 (1)(4) 23.6% 3725 S. Ocean Dr. Hollywood, FL 33019 Samuel Friedland Family Foundation 637,417 14.2% 2501 S. Ocean Dr. Hollywood, FL 33019 Hasam Realty Limited Partnership 75,000 1.7% 2501 S. Ocean Dr. Hollywood, FL 33019 Stein Management Company 20,093 Less than 1% 2501 S. Ocean Drive Hollywood, FL 33019 David B. Simpson 1,460 (5) Less than 1% 2 University Plaza #109 Hackensack, N. J. 07601 All officers and 2,361,822 52.7% directors as a group (See footnotes) (a) Includes all units as to which owner holds sole or shared voting or investment power. (1) Includes 637,417 units owned by the Samuel Friedland Family Foundation and 75,000 units owned by Hasam Realty Limited Partnership, of which this individual may be deemed a controlling person. In the case of Harold Friedland does not include 316,144 Units owned by an adult child and 65,000 Units owned by trusts for other adult children of which Jack Friedland is one of three trustees. In the case of Leonard Friedland, includes Units held for benefit of Mr. Friedland and adult children of Mr. Friedland. (2) Does not include 2,500 units owned Jack Friedland's wife. | (3) Does not include 2,500 units owned by Leonard Friedland's ex-wife. 17 (4) Does not include 96,900 units owned by Mrs. Cowan's husband, Irving Cowan. Includes 16,993 units owned by a trust for a minor child of which Mr. and Mrs. Cowan are trustees; Includes 21,708 Units owned jointly with Mr. Cowan (5) Does not include 20,000 Units owned by Stein Management Company, of which Mr. Simpson's wife owns 50% of the common stock. Item 13. Certain Relationships and Related Transactions None PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) The following documents are filed as a part of this report: 1. Financial Statements: 2. Independent Auditor's Report Royal Palm Beach Colony, Limited Partnership Financial Statements: Balance sheets as of September 30, 2001 and 2000. Statements of income for the years ended September 30, 2001, 2000, and 1999. Statements of partners' equity for the years ended September 30, 2001, 2000, and 1999. Statements of cash flows for the years ended September 30, 2001, 2000, and 1999. 3. Financial Statement Schedules: Schedule X - Supplementary Income Statement Information 18 Schedules other than those listed above have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. (b) Reports on Form 8-K None. (c) Exhibits NOTE: All references in this table of exhibits to "Registration Statement" relate to the Registration Statement of the Registrant on Form S-14 (file Number 2-96374) as originally filed with the Securities and Exchange commission on March 12, 1985, as supplemented by Amendment No. 1 filed May 23, 1985 and as effective on June 10, 1985. 3(a) Certificate and Agreement of Limited Partnership of Royal Palm Beach Colony, L.P. filed as Exhibit 3(d) to the Registration Statement and incorporated herein by reference. 3(b) Restated certificate and Agreement of Limited Partnership of Royal Palm Beach Colony, L.P. included as Appendix B to the Registration Statement and incorporated herein by reference. 3(c) Amended Certificate and Agreement of Limited Partnership of Royal Palm Beach Colony, L.P. (filed May 21, 1985 with the Secretary of State of Delaware) changing name to Royal Palm Beach Colony, Limited Partnership. Filed as Exhibit 3(g) to Amendment Number One to the Registration Statement and incorporated herein by reference. 3(d) Restated Certificate and Agreement of Limited Partnership (revised) included as Appendix B to Amendment No. 1 to the Registration Statement and filed July 11, 1985 with the Secretary of State of Delaware and incorporated herein by reference. 3(e) Restated Certificate of Limited Partnership dated December 16, 1986. Filed as Exhibit 3(e) to Report on Form 10-K for the fiscal year ended September 30, 1986 and incorporated herein by reference. 3(f) Amended and Restated Agreement of Limited Partnership dated December 16, 1986. Filed as Exhibit 3(f) to Report on Form 10-K for the fiscal year ended September 30, 1986 and incorporated herein by reference. 19 3(g) Amendment No. 1 to Amended and Restated Agreement of Limited Partnership dated December 30, 1986. Filed as Exhibit 3(g) to Report on Form 10-K for the fiscal year ended September 30, 1986 and incorporated herein by reference. 3(h) Second Amended and Restated Certificate of Limited Partnership dated December 30, 1986. Filed as Exhibit 3 (h) to Report on Form 10-K for the fiscal year ended September 30, 1986 and incorporated herein by reference. 4(a) Form of Unit Certificate issued to Limited Partners and Assignees of the Partnership. Filed as Exhibit 4 (a) to the Registration Statement and incorporated herein by reference. 4(b) Loan Agreement between Royal Palm Beach Colony, Limited Partnership and Union Bank of Florida dated October 6, 1994, pertaining to loan in the amount of $975,000. Filed as Exhibit 4(b) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1995 and incorporated herein by reference. 4(c) Correction to description of Exhibit 4(c) filed with Report of Registrant on Form 10-K for fiscal year ended September 30, 1995. Said Exhibit relates to is a promissory note for $27,247.83 of accrued interest on Promissory Note in the amount of $500,000 filed as Exhibit 4(d) to said report on Form 10-K. Filed as Exhibit 4(c) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(d) Correction to description of Exhibit 4(d) filed with Report of Registrant on Form 10-K for fiscal year ended September 30, 1995. Said Exhibit is a Promissory note from Registrant to Hasam Realty Limited Partnership in the amount of $500,000. Filed as Exhibit 4(d) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(e) Agreement between Registrant and Gerald M. Higier dated December 1, 1995 relating to purchase of 10.8 acre commercial tract. Filed as Exhibit 4(e) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1995 and incorporated herein by reference. 4(f) Agreement between Registrant and Gerald M. Higier dated in 1995 relating to purchase of 24 acres. Filed as Exhibit 4(f) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1995 and incorporated herein by reference. 20 4(g) Agreement executed August 12, 1996 between the Registrant and Lennar Homes, Inc. relating to sale of 86 single family lots in Crestwood Unit 3 - Plat Three. Filed as Exhibit 4(g) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(h) First Mortgage Modification Amendment dated June 26, 1995 to Loan Agreement referred to in Exhibit 4(b). Filed as Exhibit 4(h) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(i) Second Mortgage Modification Amendment dated October 21, 1996 to Loan Agreement referred to in Exhibit 4(b). Filed as Exhibit 4(i) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4 (j) Mortgage dated June 13, 1996 between Crossroads Associates, Ltd. and the Registrant pertaining to secured loan of $300,000 to the Registrant. Filed as Exhibit 4(j) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4 (k) Promissory Note dated June 13, 1996 in the amount of $300,000 from Registrant to Crossroads Associates, Ltd. relating to Mortgage referred to in Exhibit 4(j). Filed as Exhibit 4(k) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(l) Letter Agreement dated May 23, 1996 between Randy Rieger and the Registrant relating to brokerage and consulting services. Filed as Exhibit 4(l) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(m) Agreement for Purchase and Sale between the Registrant and TCR SFA Apartments, Inc. dated March 18, 1998 and First and Second Amendments thereto dated in June and December of 1998, respectively, relating to the sale of approximately 21.8 acres in the Crestwood Tract, Filed as Exhibit 4(m) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1998 and incorporated herein by reference. 21 4(n) Agreement dated January ____, 2001 for Purchase and Sale between the Registrant and Stewart Marcus, Trustee, relating to the sale of approximately 21.82 acres in the Crestwood Tract, filed herewith. Filed as Exhibit 4(n) to the report of the Registrant on Form 10-12 for the fiscal year ended September 30, 2000 and incorporated herein by reference. 22 SIGNATURES Pursuant to the requirements of Section 13 and 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP By: Stein Management Company, Inc. Managing General Partner By: /s/ Irving Cowan -------------------- Irving Cowan, President Date: February 26, 2002 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. Name and Title /s/ David B. Simpson -------------------- David B. Simpson Director, Vice President, Stein Management Company, Inc. /s/ Herbert Tobin ----------------------- Herbert Tobin Director, Stein Management Company, Inc. /s/ Irving Cowan ------------------- Irving Cowan Director, President, Stein Management Company, Inc. Dated: February 26, 2002 23 Royal Palm Beach Colony, Limited Partnership FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999 Royal Palm Beach Colony, Limited Partnership FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999 CONTENTS Page Independent auditors' report 1 Financial statements: Balance sheets 2 Statements of operations 3 Statements of partners' equity 4 Statements of cash flows 5-6 Notes to financial statements 7-12 Independent Auditor's Report ---------------------------- Partners Royal Palm Beach Colony, Limited Partnership Hollywood, Florida We have audited the accompanying balance sheets of Royal Palm Beach Colony, Limited Partnership as of September 30, 2001, and 2000, and the related statements of operations, partners' equity, and cash flows for each of the three years in the period ended September 30, 2001. 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 auditing standards generally accepted in the United States of America. 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 Royal Palm Beach Colony, Limited Partnership as of September 30, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2001 in conformity with accounting principles generally accepted in the United States of America. LEFCOURT, BILLIG, TIKTIN & YESNER, P.A. Coral Gables, Florida November 28, 2001

See notes to financial statements. 2

See notes to financial statements. 3

See notes to financial statements. 4 Royal Palm Beach Colony, Limited Partnership STATEMENTS OF CASH FLOWS

(continued) 5 Royal Palm Beach Colony, Limited Partnership STATEMENTS OF CASH FLOWS (CONTINUED)

See notes to financial statements. 6 Royal Palm Beach Colony, Limited Partnership NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999 Note 1. Organization and summary of significant accounting policies: The primary business purpose of the Partnership is the operation, management and orderly disposition of its assets and the distributions of the proceeds therefrom to unitholders. The general partners of the Partnership are Hasam Realty Limited Partnership and Stein Management Company, Inc. ("Steinco"). Steinco is the Managing General Partner which employs the management and clerical employees necessary to carry out the operation of the Partnership. Steinco is reimbursed by the Partnership for related expenses. A summary of the Partnership's accounting principles is as follows: Land sales: Generally, land sales are recognized when the purchaser has made an adequate down payment, 20% to 25% of the purchase price, the Partnership has no substantial remaining obligations with respect to the property, and the collectibility of the related receivable is reasonably predictable. Otherwise, either the installment or the cost recovery method is used. Under the installment method, portions of profit are recognized as cash payments are received from the buyer. Under the cost recovery method no profit is recognized until cash payments received from the buyer, including interest and principal, exceed the seller's cost of the property sold. Sale of Utility System: The Partnership recognizes profit on the 1983 sale of a utility system in the years in which increases in consumption generate amounts due to the Partnership. (See Note 8). Cash: The Partnership considers all highly liquid debt investments with maturities of three months or less when purchased to be cash equivalents. Property held for sale: Property held for sale is stated at the lower of cost or estimated net realizable value. The cost of property held for sale includes the original purchase price, cost of land development and development period real estate taxes and interest. Net income (loss) per unit: Net income (loss) per unit is calculated based on the weighted average number of units outstanding during the year. (continued) 7 Royal Palm Beach Colony, Limited Partnership NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999 Note 1. Organization and summary of significant accounting policies (continued): Concentrations of risk and financial instruments: Assets which subject the Partnership to concentrations of risk consist primarily of property held for sale. The Partnership's property held for sale is located in Florida. The Partnership's ability to sell its property is substantially dependent upon the Florida real estate economic sector. Financial instruments which potentially subject the Partnership to concentrations of credit risk include cash which is deposited with a financial institution in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. 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 and disclosures. Actual results could differ from those estimates. Reclassifications: Certain items in the 2000 financial statements have been reclassified to conform to the 2001 presentation. Note 2. Utility and other receivables: September 30, ------------------------- 2001 2000 --------- --------- Utility receivable (Note 8) $442,478 $548,317 Other 2,080 1,165 --------- --------- $444,558 $549,482 ========== ========== Note 3. Property held for sale: In connection with an August 18, 1999 sale of land, the Partnership received mitigation credits which increased the value of two other tracts of land, one of which was sold on August 27, 1999 and the other tract remains in property held for sale at September 30, 2000 and 2001. The value of the mitigation credits received ($345,600) was included in 1999 net sales of land and allocated to the cost of properties which were benefited. 8 Note 4. Other assets: Other assets consist of the following: September 30, ------------------------- 2001 2000 --------- --------- Furniture and equipment, net of accumulated depreciation $7,011 $9,595 Prepaid expenses 55,559 46,399 --------- --------- $62,570 $55,994 ========== ========== Note 5. Accounts payable and other liabilities: Accounts payable and other liabilities consist of the following: September 30, ------------------------- 2001 2000 --------- --------- Accounts payable $45,250 $67,618 Accrued liabilities: Property taxes 117,443 99,917 Other 40,540 48,016 --------- --------- $203,233 $215,551 ========== ========== Note 6. Income taxes: The Partnership, pursuant to the transitional grandfather rules of the Internal Revenue Code dealing with publicly traded partnerships, reported its income as a partnership for taxable years through December 31, 1997. The application of the grandfather rules terminated for taxable years commencing after December 31, 1997. Under the Taxpayer Relief Act of 1997, a publicly traded partnership that is currently governed by this provision may elect to continue its partnership tax status beyond December 31, 1997 by agreeing to pay an annual 3.5% Federal tax on its gross income for Federal income tax purposes (principally revenues less cost of land sold). The Partnership has elected to continue its Partnership status beyond December 31, 1997. Selling, general and administrative expenses include Federal tax of $9,238, $19,980 and $70,000 for the years ended September 30, 2001, 2000 and 1999, respectively. (continued) 9 Note 6. Income taxes (continued): The partners are required to include in their income tax returns their share of the Partnership's income or loss, as adjusted to reflect the effects of certain transactions which are accorded different accounting treatment for federal income tax purposes. The Partnership is on a calendar year end for income tax purposes. The following analysis summarizes the major differences between the financial reporting and income tax basis of the partner's equity account at September 30, 2001.

Note 7. Lease information: During the years ended September 30, 2001, 2000 and 1999 the Partnership occupied its office facility in a building owned by an entity related by common ownership. The Partnership did not incur any rent at this office facility. Other long-term operating leases on real and personal properties are not considered material. 10 Royal Palm Beach Colony, Limited Partnership NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999 Note 8. Other transactions: A subsidiary of the Company, Royal Palm Beach Utilities Company ("Utilities"), previously sold to the Village of Royal Palm Beach ("Village") all of its assets, consisting of a water treatment and distribution system and a sanitary sewer collection, treatment and disposal system located in the Village. The sale requires payments to be received by Utilities, as future connections (as measured by increases in consumption) are added to the system, over a period through September 30, 2003. Should consumption not increase sufficiently, the Partnership would not receive the full sale amount. The maximum proceeds to Utilities approximates $13,410,000, of which, under the terms of the sale, approximately $3,742,000 had not yet been received as of September 30, 2001. In addition, the Partnership had the right to receive up to $500,000, of which $361,252 has already been received, as the Village collects guaranteed revenues from developers. Since future increases in consumption and payment of guaranteed revenues cannot be assured and, therefore, the extent of future payments to the Partnership is uncertain, the Partnership accounts for this transaction utilizing the cost recovery method of accounting. The Partnership has previously fully recovered its cost and recognizes profit on the sale as increases in consumption generate amounts due to the Partnership and as the Village collects guaranteed revenues from developers. Revenues related to the sale of utility system of $442,478, $548,317 and $379,363 were recognized for fiscal years 2001, 2000 and 1999 respectively. Note 9. Revenues:

11 Royal Palm Beach Colony, Limited Partnership NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999 Note 10. Comparative quarterly financial information (unaudited):

ROYAL PALM BEACH COLONY LTD PARTNERSHIP 10-K