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8-K - FORM 8-K - CRONOS GLOBAL INCOME FUND XVI LP | f58488e8vk.htm |
EXHIBIT 99.1
REPORT FOR THE FOURTH QUARTER 2010
To the Limited Partners of Cronos Global Income Fund XVI, L.P.:
The distribution to Limited Partners for February, March and April 2011 will be $146,636 per month,
which is equivalent to 5.50% (annualized) of your original capital contribution. Of this, $33,326
has been generated by net cash provided by operating activities which is equivalent to 1.25%
(annualized) of your original capital contribution. $113,310 has been generated from the sale of
container rental equipment, which is equivalent to 4.25% (annualized) of your original investment.
Your distribution check is enclosed with this report, unless you have provided us with other
mailing instructions. To date, approximately $10,842 per $10,000 originally invested has been
returned to the Limited Partners, assuming an investment made at the inception of the Partnership
in December 1995.
The utilization rate for the Partnerships container fleet was 97% at December 31, 2010. The
combined effects of increased trade volumes on major trade routes, the practice of slow steaming
employed by many of the shipping lines, the reduction in the size of the global container fleet in
2009 and the capital constraints experienced by many shipping lines have placed greater reliance on
leasing companies. As a result, demand for leased containers has increased. Direct operating
expenses, particularly inventory-related expenses, have declined as off-hire container volumes
decreased in line with the improved market.
The General Partner remains focused on the Partnerships liquidation phase as it approaches its
15th year of operations, concentrating its attention on the retirement of the remaining equipment
in the Partnerships container fleet. The Partnership disposed 145 containers during the fourth
quarter of 2010, and at December 31, 2010, the Partnerships fleet consisted of approximately 48%
of the original combined fleet. The General Partner will take several factors into consideration
when examining options for the timing of the disposal of the remaining containers and the ultimate
termination of the Partnership, including the level of net lease revenue generated by the
diminishing fleet, the level of costs relative to this revenue, projected disposal proceeds on the
disposition of the Partnerships containers, overall market conditions and any foreseeable changes
in other general and administrative expenses.
The following table sets forth the number of containers in the Partnerships operating lease fleet
based on container type, and is measured in twenty-foot equivalent units (TEUs), at December 31,
2010:
Dry Cargo | Refrigerated | |||||||||||||||
Containers | Containers | Tank Containers | Total | |||||||||||||
Container on lease: |
||||||||||||||||
Master lease |
4,065 | 35 | 14 | 4,114 | ||||||||||||
Term lease |
||||||||||||||||
Short term1 |
154 | 1 | 17 | 172 | ||||||||||||
Long term2 |
1,240 | 14 | 8 | 1,262 | ||||||||||||
1,394 | 15 | 25 | 1,434 | |||||||||||||
Subtotal |
5,459 | 50 | 39 | 5,548 | ||||||||||||
Containers off-hire |
155 | 6 | 4 | 165 | ||||||||||||
Total container fleet |
5,614 | 56 | 43 | 5,713 | ||||||||||||
1. | Short term leases represent term leases that are either scheduled for renegotiation or that may expire on or before 2011. | |
2. | Long term leases represent term leases that will expire after 2011. |
During the first half of 2011, CCC may distribute a request for proposal (RFP) to prospective
third-party container buyers. A RFP would seek to determine any interest such parties may have in
purchasing the remaining containers owned by the Partnership. CCC will not make a decision
relating to the final liquidation of the Partnership until any such proposals have been received
and fully evaluated. If a decision is made to liquidate the Partnership, the distribution of cash
from operations or sales proceeds may be suspended while the liquidation of the remaining
containers in the fleet is evaluated. This is to ensure that sufficient cash reserves will be
available for expenses relating to the final liquidation and subsequent dissolution of the
Partnership. CCC would make one or more liquidating distributions to the Limited Partners on or
before the termination of the Partnership, or reinstate the monthly cash distributions should no
decision be made to liquidate the fleet in 2011.
No financial statements are presented in this report. Instead, the audited financial statements
for 2010 will be included in the 2010 Annual Report, which will be mailed to the limited partners
at the end of April 2011. The scheduled mailing date of your 2010 Schedule K-1 tax form, which
contains tax information related to your Partnership investment, is March 15, 2011.
February 28, 2011
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CRONOS CAPITAL CORP. The General Partner |