SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended: June 30, 1996
Commission File Number: 0-20707
COLONIAL REALTY LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Alabama 63-1098468
(State of organization) (IRS Employer
Identification Number)
2101 Sixth Avenue North 35203
Suite 750 (Zip Code)
Birmingham, Alabama
(Address of principal executive offices)
(205) 250-8700
(Registrant's telephone number, including area code)
Indicate by check mark 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 (2) has been subject to such
filing requirements for the past 90 days. YES x NO ___
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
INDEX TO FORM 10-Q
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets as of
June 30, 1996 and December 31, 1995
Consolidated Condensed Statements of Income for the Three Months Ended
June 30, 1996 and 1995 and for the Six Months Ended June 30, 1996 and
1995
Consolidated Condensed Statements of Cash Flows
for the Six Months Ended June 30, 1996 and 1995
Notes to Consolidated Condensed Financial Statements
Report of Independent Accountants
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT
<PAGE>
<TABLE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED BALANCE SHEETS
--------------------
<CAPTION>
June 30, 1996
(Unaudited) December 31, 1995
------------ -----------------
ASSETS
<S> <C> <C>
Land, buildings, & equipment, net $689,959,144 $624,514,188
Undeveloped land and
construction in progress 77,639,021 32,640,381
Cash and equivalents 1,817,543 1,584,850
Restricted cash 2,169,095 2,079,796
Accounts receivable, net 1,497,696 2,280,508
Prepaid expenses 3,427,019 3,561,611
Notes receivable 610,453 580,169
Deferred debt and lease costs, net 5,077,947 3,841,814
Investments 5,183,508 5,363,639
Other assets 4,806,178 4,849,614
------------ ------------
$792,187,604 $681,296,570
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Notes and mortgages payable $354,885,585 $354,099,770
Accounts payable 13,513,396 11,423,830
Accrued expenses 6,308,672 1,933,068
Tenant deposits 2,806,824 2,401,604
Unearned rent 385,117 843,642
------------ ------------
Total liabilities 377,899,594 370,701,914
------------ ------------
Redeemable units, at
redemption value 201,852,805 207,596,087
------------ ------------
Partners' capital, excluding
redeemable units 212,435,205 102,998,569
------------ ------------
$792,187,604 $681,296,570
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
---------------------
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue:
Rent $30,815,831 $25,743,804 $59,393,311 $50,405,522
Other 1,008,674 1,038,240 2,038,148 1,884,563
----------- ----------- ----------- -----------
Total revenue 31,824,505 26,782,044 61,431,459 52,290,085
----------- ----------- ----------- -----------
Property operating expenses:
General operating expenses 2,191,186 1,985,630 4,541,943 3,865,716
Salaries and benefits 2,274,592 1,808,875 4,127,627 3,509,118
Repairs and maintenance 3,320,269 2,573,167 6,147,126 4,865,056
Taxes,licenses,and insurance 2,862,519 2,289,423 5,533,951 4,572,852
General and administrative 727,254 1,358,872 1,565,383 2,565,043
Depreciation 5,254,430 4,407,248 10,002,359 8,719,316
Amortization 443,393 574,476 990,478 1,101,144
----------- ----------- ----------- -----------
Total operating expenses 17,073,643 14,997,691 32,908,867 29,198,245
----------- ----------- ----------- -----------
Income from operations 14,750,862 11,784,353 28,522,592 23,091,840
----------- ----------- ----------- -----------
Other income (expense):
Interest expense (5,140,379) (6,081,084)(10,230,852)(12,387,321)
Income from investments 185,219 124,749 318,376 251,757
Gains from sales of property 14,762 (128) 14,762 175,450
----------- ----------- ----------- -----------
Total other expense (4,940,398) (5,956,463) (9,897,714)(11,960,114)
----------- ----------- ----------- -----------
Income before
extraordinary item 9,810,464 5,827,890 18,624,878 11,131,726
Extraordinary loss from early
extinguishment of debt (159,610) -0- (478,240) -0-
----------- ----------- ----------- -----------
Net income $9,650,854 $5,827,890 $18,146,638 $11,131,726
=========== =========== =========== ===========
Net income per unit $0.37 $0.31 $0.72 $0.61
=========== =========== =========== ===========
Weighted average units
outstanding 25,971,789 18,784,021 25,320,630 18,221,959
=========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
-------------------
<CAPTION>
Six Months Ended
June 30,
---------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $18,146,638 $11,131,726
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 10,992,837 9,820,460
Provision for doubtful accounts 24,229 119,391
Gains from sales of property (14,762) (175,450)
Income (loss) from investments 43,735 (107,476)
Decrease (increase) in:
Restricted cash (89,299) (1,004,063)
Accounts receivable 758,583 980,982
Notes receivable (30,284) (20,461)
Prepaid expenses 308,080 310,775
Other assets (443,821) (1,107,179)
Increase (decrease) in:
Accounts payable 2,154,244 (1,315,091)
Accrued expenses 4,109,946 3,542,610
Tenant deposits 208,345 192,861
Unearned rent (458,525) 367,981
Net cash provided by operating ----------- -----------
activities 35,709,946 22,737,066
----------- -----------
Cash flows from investing activities:
Property acquisition costs paid (34,856,523) (24,305,682)
Development expenditures (48,059,623) (7,059,377)
Tenant improvements (325,604) (635,788)
Capital expenditures (2,579,582) (955,920)
Proceeds from sales of property 14,762 328,733
Distributions from investments 139,396 467,062
Capital contributions
to investments (3,000) (146,600)
----------- -----------
Net cash used in investing activities (85,670,174) (32,307,572)
----------- -----------
Cash flows from financing activities:
Principal reductions of debt (35,918,815) (17,905,384)
Proceeds from additional borrowings 500,000 61,520,000
Change in revolving credit balances 6,256,632 (93,173,744)
Capital contributions 106,943,150 73,761,381
Capital distributions (25,783,730) (15,171,281)
Payment of mortgage financing cost (1,804,316) (673,383)
------------ -----------
Net cash provided by financing activities 50,192,921 8,357,589
------------ -----------
Increase (decrease) in cash and equivalents 232,693 (1,212,917)
Cash and equivalents, beginning of period 1,584,850 2,797,767
------------ -----------
Cash and equivalents, end of period $1,817,543 $1,584,850
============ ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
Note 1 -- Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
have been prepared by management in accordance with generally accepted
accounting principles for interim financial reporting and in conjunction with
the rules and regulations of the Securities and Exchange Commission. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. These financial statements should be read in
conjunction with the information included in the Company's General Form for
Registration of Securities as filed with the Securities and Exchange Commission
on Form 10 on July 6, 1996. The December 31, 1995 balance sheet data presented
herein was derived from audited financial statements but does not include all
disclosures required by generally accepted accounting principles.
Note 2 -- Increase in Revolving Credit Agreement
On June 4, 1996, the Company increased its unsecured line of credit
from $75 million to $110 million. The credit facility, which is used by the
Company primarily to finance additional property investments, bears interest at
a rate ranging between 125 and 175 basis points above LIBOR. The credit facility
is renewable annually in December with approval of all parties and provides for
a two year amortization in the event of non-renewal.
Note 3 -- Debt Refinancing
On June 28, 1996, the Company refinanced loans secured by five of the
Company's multifamily properties and representing a total of approximately $53.0
million in outstanding indebtedness. The refinanced loans are financed through
tax-exempt bonds which are credit enhanced by Fannie Mae. These loans require
monthly interest payments through June 2006 and principal and interest payments
from July 2006 through June 2026. The loans bear interest at a variable rate,
determined weekly at the rate necessary to produce a bid in the process of
remarketing the bonds. The interest rate (including the credit enhancement fee)
for these loans as of June 30, 1996 was 4.25%.
Note 4 -- Debt Offering
On July 22, 1996, the Company completed a $130 million public offering
of unsecured senior notes. The securities, which received a rating of Baa3 from
Moody's Investor Service and a rating of BBB- from Standard & Poor's Ratings
Group, were issued in two series of $65 million each requiring bi-annual
payments of interest only. The five-year series, which matures in July 2001,
bears interest at 7.50% and was priced at a spread of 95 basis points over the
five year treasury bond. The ten-year series, which matures in July 2006, bears
interest at 8.05% and was priced at a spread of 128 basis points over the ten
year treasure bond. The Company used the proceeds of the offering to repay the
$85,977,000 balance outstanding on the Company's line of credit and to fund the
$41 million cash portion of the acquisition of a retail mall in Myrtle Beach,
South Carolina. The remainder of the proceeds were used to fund development
activity currently in progress. After the application of the net proceeds, the
Company's line of credit is fully available to finance additional acquisitions
and development.
Note 5 -- Acquisitions
On June 19, 1996, the Company acquired 12.5 acres of land located in
Bradenton, Florida. The land was acquired at a purchase price of $984,000
pursuant to an option acquired as part of a previous land purchase in November
1995. The Company intends to use the land to expand its multifamily community
located in Bradenton at a total cost of approximately $9.1 million, including
the land acquisition costs. The land acquisition was and the development
expenditures are expected to be funded through advances on the Company's line of
credit.
On July 1, 1996, the Company acquired 49.8 acres of land located in
Macon, Georgia for a purchase price of $1,440,000 from Colonial Commercial
Investments, Inc. The purchase price, which was determined pursuant to an option
acquired at the time of Colonial Properties Trust's (Colonial) IPO in September
1993, was paid through the issuance of 58,466 limited partnership units.
Colonial's Board of Trustees unanimously approved the transaction with trustees
James K. Lowder and Thomas H. Lowder (owners of Colonial Commercial Investments,
Inc.) abstaining from the vote. The Company intends to use the land to develop a
480-unit multifamily apartment community. Construction of the 240-unit first
phase is expected to be completed by the fourth quarter of 1997 at a total cost
of approximately $12.8 million. Construction expenditures are expected to be
financed through advances on the Company's line of credit.
On July 23, 1996, the Company acquired a 488,000 square foot retail
mall located in Myrtle Beach, South Carolina for a purchase price of $42.2
million. The Company used proceeds from its recent debt offering along with the
issuance of 48,905 limited partnership units to finance the acquisition. The
limited partnership units have been allocated to expansion land acquired as part
of the acquisition and, as such, will not be eligible to receive partnership
distributions for 24 months after closing.
Note 6 -- Distribution
On July 25, 1996, a cash distribution was declared to partners of the
Company in the amount of $0.50 per partnership unit, totaling $12,986,000. The
distribution was made to partners of record as of August 5, 1996 and was paid on
August 12, 1996.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Colonial Properties Holding Company, Inc.
We have reviewed the accompanying consolidated balance sheets of
Colonial Realty Limited Partnership as of June 30, 1996 and 1995, and the
related consolidated condensed statements of income and cash flows for the
three-month and six-month periods then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying condensed consolidated financial
statements for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of December 31, 1995, and
the related consolidated statements of operations, Partners' capital, and cash
flows for the year then ended (not presented herein); and in our report dated
January 25, 1996, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated condensed balance sheet as of December 31, 1995, is
fairly stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
July 23, 1996
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
General
The following discussion should be read in conjunction with
management's discussion and analysis of financial condition and results of
operations and all of the other information appearing in the Company's General
Form for Registration of Securities as filed with the Securities and Exchange
Commission on Form 10 on July 6, 1996 and with the financial statements included
therein and the notes thereto.
Results of Operations -- Three Months Ended June 30, 1996 and 1995.
Revenue -- Total revenue increased by $5,042,000, or 18.8%, for the
second quarter of 1996 when compared to the second quarter of 1995. Of this
increase, $4,834,000 represents revenues generated by properties acquired or
developed during 1995 and 1996. Revenues also decreased $508,000 during the
second quarter of 1996 when compared to the second quarter of 1995 due to
one-time revenues received from lease cancellations during the during the second
quarter of 1995. The $716,000 remainder of the increase in revenues when
comparing the second quarter of 1996 to the second quarter of 1995 represents an
increase in rents charged to tenants.
Operating Expenses -- Operating expenses increased by $2,076,000, or
13.8%, for the second quarter of 1996 when compared to the second quarter of
1995. Expenses incurred by properties acquired during 1995 and 1996 increased
operating expenses by $2,280,000. Operating expenses also decreased by $675,000
due to the decrease in a reserve for certain state tax contingencies of $350,000
during the second quarter of 1996 compared to an increase of $325,000 in this
reserve during the second quarter of 1995. The $471,000 remainder of the
increase in operating expenses when comparing the second quarter of 1996 to the
second quarter of 1995 represents an increase in expenses incurred by existing
properties.
Other Income (Expense) -- Interest expense decreased by $941,000, or
15.5%, for the second quarter of 1996 when compared to the second quarter of
1995. Interest expense decreased $466,000 due to the decrease in indebtedness
which was repaid through a portion of Colonial Properties Trust's equity
offering proceeds in January 1996, net of interest incurred on additional
acquisition and development activity. Interest expense also decreased by
$801,000 due to the capitalization of $932,000 in interest on construction
expenditures during the second quarter of 1996 compared to $131,000 capitalized
during the second quarter of 1995.
Results of Operations -- Six Months Ended June 30, 1996 and 1995.
Revenue -- Total revenue increased by $9,141,000, or 17.5%, for the six months
ended June 30, 1996, when compared to the six months ended June 30, 1995. Of
this increase, $7,814,000 represents revenues generated by properties acquired
or developed in 1995 or 1996. Revenues also decreased $508,000 during the first
half of 1996 when compared to the first half of 1995 due to one-time revenues
received from lease cancellations during the second quarter of 1995. The
$1,835,000 remainder of the increase in revenues when comparing the first half
of 1996 to the first half of 1995 represents an increase in rents charged to
tenants.
Operating Expenses -- Operating expenses increased by $3,711,000, or
12.7%, for the six months ended June 30, 1996 when compared to the six months
ended June 30, 1995. Expenses incurred by properties acquired during 1995 and
1996 increased operating expenses by $3,589,000. Operating expenses also
decreased by $1,075,000 due to the decrease in a reserve for certain state tax
contingencies of $650,000 during the first half of 1996 compared to an increase
of $425,000 in this reserve during the first half of 1995. The $1,197,000
remainder of the increase in operating expenses when comparing the first half of
1996 to the first half of 1995 represents an increase in expenses incurred by
existing properties.
Other Income and Expenses -- Interest expense decreased $2,156,000, or
17.4%, for the six months ended June 30, 1996, when compared to the six months
ended June 30, 1995. Interest expense decreased $859,000 due to the decrease in
indebtedness which was repaid through a portion of Colonial Properties Trust's
equity offering proceeds in January 1996, net of interest incurred on additional
acquisition and development activity. Interest expense also decreased by
$1,351,000 due to the capitalization of $1,565,000 in interest on construction
expenditures during the first half of 1996 compared to $214,000 capitalized
during the first half of 1995.
Liquidity and Capital Resources
As of June 30, 1996, the Company had one bank line of credit providing
for total borrowings of $110 million. The line, which is used by the Company
primarily to finance property acquisitions and development, bears interest at a
rate ranging between LIBOR plus 125 to LIBOR plus 175 basis points and expires
in December 1998. The balance outstanding on this line at June 30, 1996 was
$85,139,000.
On July 22, 1996, the Company completed a $130 million public offering
of unsecured senior notes. The securities, which received a rating of Baa3 from
Moody's Investor Service and a rating of BBB- from Standard & Poor's Ratings
Group, were issued in two series of $65 million each requiring bi-annual
payments of interest only. One series, which matures in July 2001, bears
interest at 7.50% and was priced at a spread of 95 basis points over the five
year treasury bond. The other series, which will mature in July 2006, bears
interest at 8.05% and was priced at a spread of 128 basis points over the ten
year treasure bond. The Company used the proceeds of the offering to repay the
$85,977,000 balance outstanding on the Company's line of credit and to fund the
$41 million cash portion of the acquisition of a retail mall in Myrtle Beach,
South Carolina. The remainder of the proceeds were used to fund development
activity currently in progress. After the application of the net proceeds, the
Company's line of credit is fully available to finance additional acquisitions
and development.
Management intends to replace significant borrowings that may
accumulate under the bank line of credit with funds generated from the sale of
additional securities, including sales of partnership interests to CPHC in
connection with public offerings of securities by Colonial, and/or permanent
financing, as market conditions permit. Management believes that these potential
sources of funds, along with the possibility of issuing limited partnership
units in exchange for properties, will provide the Company with the means to
finance additional acquisitions. Management anticipates that its net cash
provided by operations and its existing cash balances will provide the necessary
funds on a short- and long-term basis to cover its operating expenses, interest
expense on outstanding indebtedness, recurring capital expenditures, and
distributions to partners.
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
15. Letter re: Unaudited Interim Financial Information
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
COLONIAL REALTY LIMITED PARTNERSHIP
By: Colonial Properties Holding Company, Inc.,
its general partner
Date: August 14, 1996 /s/ Douglas B. Nunnelley
-------------------------
Douglas B. Nunnelley
Senior Vice President
and Chief Financial Officer
Date: August 14, 1996 /s/ Douglas B. Nunnelley
------------------------
Douglas B. Nunnelley
Senior Vice President
and Chief Financial Officer
(Duly Authorized Officer
and Principal Financial Officer)
Date: August 14, 1996 /s/ Kenneth E Howell
--------------------
Kenneth E. Howell
Vice President, Controller,
and Secretary
(Principal Accounting Officer)
<PAGE>
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549
Re: Colonial Realty Limited Partnership
(File No. 0-20707)
Registration on Form S-3
We are aware that our report dated July 23, 1996 on our review of interim
financial information of Colonial Realty Limited Partnership for the quarters
ended June 30, 1996 and 1995 and included in the Company's quarterly report on
Form 10-Q for the quarters then ended is incorporated by reference in the
registration statement on Form S-3 related to the Shelf Registration filed on
July 5, 1996. Pursuant to Rule 436(c) under the Securities Act of 1933, this
report should not be considered a part of the registration statement prepared or
certified by us within the meaning of Sections 7 and 11 of that Act.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
July 23, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001013844
<NAME> Colonial Realty Limited Partnership
<MULTIPLIER> 1
<CURRENCY> U.S. Currency
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Jun-30-1996
<EXCHANGE-RATE> 1.000
<CASH> 1,817,543
<SECURITIES> 0
<RECEIVABLES> 2,108,149
<ALLOWANCES> 24,229
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 778,955,846
<DEPRECIATION> 89,781,230
<TOTAL-ASSETS> 792,187,604
<CURRENT-LIABILITIES> 0
<BONDS> 354,885,585
0
0
<COMMON> 0
<OTHER-SE> 414,288,010
<TOTAL-LIABILITY-AND-EQUITY> 792,187,604
<SALES> 0
<TOTAL-REVENUES> 61,431,459
<CGS> 0
<TOTAL-COSTS> 32,908,867
<OTHER-EXPENSES> 333,138
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,230,852
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 18,624,878
<DISCONTINUED> 0
<EXTRAORDINARY> 478,240
<CHANGES> 0
<NET-INCOME> 18,146,638
<EPS-PRIMARY> .72
<EPS-DILUTED> .72
</TABLE>
