UNITED STATES
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: March 31, Commission File Number: 0-20707
1997
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
Page
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets as of
March 31, 1997 and December 31, 1996 3
Consolidated Condensed Statements of Income for the
Three Months Ended March 31, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flows
for the Three Months Ended March 31, 1997 and 1996 5
Notes to Consolidated Condensed Financial Statements 6
Report of Independent Accountants 8
Item 2. Management's Discussion and Analysis of Financial 9
Condition and Results of Operations
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
EXHIBITS 12
Page 2
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COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
--------------------
March 31, 1997
(Unaudited) December 31, 1996
---------------- -----------------
ASSETS
Land, buildings, & equipment, net $ 866,066 $ 801,798
Undeveloped land and construction in progress 125,263 113,689
Cash and equivalents 2,282 3,340
Restricted cash 2,568 2,450
Accounts receivable, net 4,815 4,779
Prepaid expenses 2,782 4,468
Notes receivable 570 584
Deferred debt and lease costs, net 6,803 6,288
Investments 5,086 5,028
Other assets 5,402 5,523
---------------- -----------------
$ 1,021,637 $ 947,947
================ =================
LIABILITIES AND PARTNERS' CAPITAL
Notes and mortgages payable $ 534,927 $ 506,435
Accounts payable 6,421 7,451
Accounts payable to affiliates 9,730 9,973
Accrued interest 4,946 5,465
Accrued expenses 4,268 1,585
Tenant deposits 3,156 2,926
Unearned rent 929 924
---------------- -----------------
Total liabilities 564,377 534,759
---------------- -----------------
Minority interest in consolidated
operating property 3,255 -0-
---------------- -----------------
Redeemable units, at redemption value 245,707 256,098
---------------- -----------------
Partners' capital, excluding redeemable units 208,298 157,090
---------------- -----------------
$ 1,021,637 $ 947,947
================ =================
The accompanying notes are an integral part of these financial statements.
Page 3
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per unit data)
---------------------
Three Months Ended
March 31,
--------------------------
1997 1996
--------------------------
Revenue:
Minimum rent $ 33,660 $ 25,742
Percentage rent 322 264
Tenant recoveries 3,420 2,221
Other 1,768 1,380
---------------- ------------
Total revenue 39,170 29,607
---------------- ------------
Property operating expenses:
General operating expenses 2,668 2,351
Salaries and benefits 2,274 1,853
Repairs and maintenance 3,580 2,827
Taxes, licenses, and insurance 3,618 2,671
General and administrative 1,213 838
Depreciation 6,669 4,748
Amortization 354 547
---------------- ------------
Total operating expenses 20,376 15,835
---------------- ------------
Income from operations 18,794 13,772
---------------- ------------
Other income (expense):
Interest expense (8,488) (5,090)
Income from subsidiaries 40 (2)
Losses from sales of property (1) -0-
Minority interest in consolidated
operating property (56) -0-
---------------- ------------
Total other expense (8,505) (5,092)
---------------- ------------
Income before extraordinary item 10,439 8,815
Extraordinary loss from early
extinguishment of debt (384) (319)
---------------- ------------
Net income $ 10,055 $ 8,496
================ ============
Net income per unit $ 0.37 $ 0.34
================ ============
Weighted average units outstanding 27,112 24,669
================ ============
The accompanying notes are an integral part of these financial statements.
Page 4
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COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
-------------------
Three Months Ended
March 31,
--------------------------------------
1997 1996
---------------- ----------------
Cash flows from operating activities:
Net income $ 10,055 $ 8,496
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 7,023 5,295
Income from partnerships (190) (133)
Minority interest in income of
property partnership 56 -0-
Other 543 48
Decrease (increase) in:
Restricted cash (118) (12)
Accounts receivable (253) 679
Prepaid expenses 581 259
Other assets 142 (497)
Increase (decrease) in:
Accounts payable (1,030) 1,845
Accrued interest (519) (262)
Accrued expenses and other (793) 1,847
-------------- ----------------
Net cash provided by
operating activities 15,497 17,565
-------------- ----------------
Cash flows from investing activities:
Acquisition of properties (19,393) -0-
Development expenditures (31,991) (24,710)
Tenant improvements (471) (95)
Capital expenditures (1,147) (619)
Distributions from partnerships 253 207
Capital contributions to partnerships (121) (3)
-------------- ----------------
Net cash used in investing
activities (52,870) (25,220)
-------------- ----------------
Cash flows from financing activities:
Principal reductions of debt (24,789) (8,982)
Proceeds from additional borrowings 50,000 -0-
Net change in revolving credit balances (17,306) (70,692)
Cash contributions 43,919 106,919
Capital distributions (14,322) (12,889)
Payment of mortgage financing cost (803) (34)
Other, net (384) -0-
-------------- ----------------
Net cash provided by financing
activities 36,315 14,322
-------------- ----------------
Increase (decrease) in cash and
equivalents (1,058) 6,667
Cash and equivalents, beginning of period 3,340 1,585
-------------- ----------------
Cash and equivalents, end of period $ 2,282 $ 8,252
============== ================
The accompanying notes are an integral part of these financial statements.
Page 5
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COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
Note 1 -- Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
of Colonial Realty Limited Partnership ("CRLP") 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 CRLP's Annual Report as filed with the Securities and Exchange
Commission on Form 10-K for the year ended December 31, 1996. The December 31,
1996 balance sheet data presented herein was derived from audited financial
statements but does not include all disclosures required by generally accepted
accounting principles.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS
128). SFAS 128 supersedes existing generally accepted accounting principles
relative to the calculation of earnings per share (unit), is effective for years
ending after December 15, 1997, and requires restatement of all prior period
earnings per share (unit) information upon adoption. Generally, SFAS 128
requires a calculation of basic earnings per share (unit), which takes into
consideration income (loss) available to common shareholders (unitholders) and
the weighted average of common shares (units) outstanding. SFAS 128 also
requires the calculation of a diluted earnings per share (unit), which takes
into effect the impact of all additional common shares (units) that would have
been outstanding if all dilutive potential common shares (units) relating to
options, warrants, and convertible securities had been issued, as long as their
effect is dilutive, with a related adjustment of income available for common
shareholders (unitholders), as appropriate. SFAS 128 requires dual presentation
of basic and diluted earnings per share (unit) on the face of the statement of
operations and requires a reconciliation of the numerator and denominator of the
basic earnings per share (unit) computation. CRLP does not expect the effect of
its adoption of SFAS 128 to be material.
Note 2 -- Acquisitions
In two transactions on January 1 and January 8, 1997, CRLP acquired a
73.05% interest in an office park comprised of eight one-level buildings in
Birmingham, Alabama. The purchase price of $20.8 million was funded by the
assumption of $8.7 million in mortgage debt, the issuance of 25,163 limited
partnership units valued at $0.7 million, and an advance on CRLP's unsecured
line of credit. The assets and liabilities, and the results of operations, and
cash flows of this property are consolidated in CRLP's financial statements.
The remaining 26.95% ownership in this property is reflected as "minority
interest in consolidated operating property" in CRLP's balance sheet and
statement of income, and is included in "minority interest" on CRLP's statement
of cash flows.
On March 24, 1997, CRLP acquired a community shopping center in Athens,
Georgia. The purchase price of $22.2 million was financed through the
assumption of debt totaling $11.9 million and an advance on CRLP's unsecured
line of credit.
Page 6
<PAGE>
Also on March 24, 1997, CRLP acquired a community shopping center in
Birmingham, Alabama. The $3.0 million purchase price of the center was financed
through the issuance of 16,303 limited partnership units, valued at $0.5
million, and an advance on CRLP's unsecured line of credit.
On April 1, 1997, CRLP acquired a multifamily community in Birmingham,
Alabama. The $20.5 million purchase price was financed through the issuance of
57,072 limited partnership units, valued at $1.6 million, and an advance on
CRLP's unsecured line of credit.
Note 3 -- Distribution
On April 24, 1997, a cash distribution was declared to partners of CRLP
in the amount of $0.52 per unit, totaling $14.4 million. The distribution was
made to partners of record as of May 5, 1997, and will be paid on May 12, 1997.
Page 7
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Colonial Properties Holding Company, Inc.:
We have reviewed the accompanying consolidated condensed balance sheet of
Colonial Realty Limited Partnership (the "Partnership") as of March 31, 1997,
and the related consolidated condensed statements of income and cash flows for
the three-month periods ended March 31, 1997 and 1996. These financial
statements are the responsibility of the Partnership'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, 1996, 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
24, 1997, 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, 1996, is fairly stated
in all material respects in relation to the consolidated balance sheet from
which it has been derived.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
April 18, 1997
Page 8
<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 Partnership's 1996 Annual Report as
filed with the Securities and Exchange Commission on Form 10-K and with the
financial statements included therein and the notes thereto.
Results of Operations -- Three Months Ended March 31, 1997 and 1996 Revenue --
Total revenue increased by $9,563,000, or 32.3%, for the
first quarter of 1997 when compared to the first quarter of 1996. Of this
increase, $8,148,000 represents revenues generated by properties acquired or
developed during 1996 and 1997. The $1,415,000 remainder of the increase in
revenues when comparing the first quarter of 1997 to the first quarter of 1996
represents an increase in rents charged to tenants.
Operating Expenses -- Total operating expenses increased by $4,541,000, or
28.7%, for the first quarter of 1997 when compared to the first quarter of 1996.
Of this increase, $3,922,000 represents operating expenses of the properties
acquired or developed during 1996 and 1997. Operating expenses also increased by
$170,000 due to the resolution of prior reserves for certain state tax
contingencies in the amount of $300,000 in the first quarter of 1996 and only
$130,000 in the first quarter of 1997.
Other Income and Expenses -- Interest expense increased by $3,398,000, or
66.7%, for the first quarter of 1997 when compared to the first quarter of 1996.
Interest expense increased $4,873,000 due to the increase in indebtedness which
was incurred to finance acquisition and development activity, net of
indebtedness which was repaid through a portion of CRLP's issuance of limited
partnership units in January 1997. Interest expense also decreased by $693,000
due to the capitalization of $1,254,000 in interest on construction expenditures
during the first quarter of 1997 compared to $561,000 capitalized during the
first quarter of 1996.
Liquidity and Capital Resources
As of March 31, 1997, CRLP had one bank line of credit providing for total
borrowings of $125 million. The line, which is used by CRLP primarily to finance
property acquisitions and development, bears interest at a rate ranging between
LIBOR plus 100 to LIBOR plus 150 basis points and expires in December 1998. The
balance outstanding on this line at March 31, 1997, was $31,509,000.
Management intends to replace significant borrowings that may accumulate
under the bank line of credit with funds generated from the sale of additional
Units to Colonial Properties Holding Company, Inc. in connection with public
offerings of securities by Colonial Properties Trust, 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 CRLP 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 dividends to
shareholders in accordance with Internal Revenue Code requirements applicable to
real estate investment trusts.
Page 9
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
12. Ratio of Earnings to Fixed Charges
15. Letter re: Unaudited Interim Financial Information
Page 10
<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,
a Delaware limited partnership
By: Colonial Properties Holding Company, Inc.,
its general partner
Date: May 8, 1997 /s/ Howard B. Nelson, Jr.
-------------------------
Howard B. Nelson, Jr.
Chief Financial Officer
Date: May 8, 1997 /s/ Howard B. Nelson, Jr.
-------------------------
Howard B. Nelson, Jr.
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial Officer)
Date: May 8, 1997 /s/ Kenneth E. Howell
----------------------
Kenneth E. Howell
Vice President, Controller,
and Secretary
(Principal Accounting Officer)
Page 11
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COLONIAL REALTY LIMITED PARTNERSHIP
EXHIBIT 12 - Ratio of Earnings to Fixed Charges
CRLP's ratio of earnings to fixed charges for the three months ended March
31, 1997 and 1996, was 2.04 and 2.52, respectively.
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of income (loss) before
gains from sales of property and extraordinary items plus fixed charges. Fixed
charges consist of interest expense (including interest costs capitalized) and
the amortization of debt issuance costs.
Page 12
<PAGE>
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549
Re: Colonial Realty Limited Partnership
(File No. 0-20707)
Registrations on Form S-3
We are aware that our report dated April 18, 1997 on our review of interim
financial information of Colonial Realty Limited Partnership for the quarters
ended March 31, 1997 and 1996 and included in the Company's quarterly report on
Form 10-Q for the quarters then ended, is incorporated by reference in the
registration statements on Form S-3 related to the Shelf Registrations filed on
July 5, 1996, and October 25, 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.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
May 8,1997
Page 13
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,282
<SECURITIES> 0
<RECEIVABLES> 4,815
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 866,066
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,021,637
<CURRENT-LIABILITIES> 0
<BONDS> 534,927
0
0
<COMMON> 0
<OTHER-SE> 454,005
<TOTAL-LIABILITY-AND-EQUITY> 1,021,637
<SALES> 37,402
<TOTAL-REVENUES> 39,170
<CGS> 20,376
<TOTAL-COSTS> 20,376
<OTHER-EXPENSES> 8,355
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,488
<INCOME-PRETAX> 10,439
<INCOME-TAX> 0
<INCOME-CONTINUING> 10,439
<DISCONTINUED> 0
<EXTRAORDINARY> (384)
<CHANGES> 0
<NET-INCOME> 10,055
<EPS-PRIMARY> .37
<EPS-DILUTED> 0
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