FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1998
Commission file number 0-7752
CONTINENTAL REAL ESTATE PARTNERS, LTD.
(Exact name of Registrant as Specified in its
Certificate of Limited Partnership)
Massachusetts 04-2523977
(State of organization) (Internal Revenue Service
Employer Identification
Number)
Wood Ridge Road
Glen Arbor, Michigan 49636
(Address of principal executive (Zip code)
offices)
(616) 334-5000
Registrants' telephone number
Including area code
Not applicable
Former name, former address and former fiscal year,
if changed since last report.
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 and
Exchange Act of 1934 during the preceding 12 months (or 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
The number of limited partnership interests outstanding as of June 30,
1998:
Limited partnership units, $500 per unit - 30,004 units
<PAGE>
Index
CONTINENTAL REAL ESTATE PARTNERS, LTD.
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Statements of assets, liabilities and partners' capital -
June 30, 1998 and December 31, 1997 3
Statements of operations - quarter ended and six months ended
June 30, 1998 and 1997 4
Statements of changes in partners' capital - six months
ended June 30, 1998 and 1997 5
Statements of cash flows - six months ended
June 30, 1998 and 1997 6
Notes to financial statements - June 30, 1998 7
Report of Independent Certified Public Accountants on Interim
Financial Information 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 10
SIGNATURES 11
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PART I. FINANCIAL INFORMATION
Continental Real Estate Partners, Ltd.
STATEMENTS OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
<CAPTION>
June 30, December 31,
1997 1996
ASSETS (Unaudited) (Note B)
<S> <C> <C>
Investments in real estate
Land $ - $ 183,581
Land improvements - 1,877,263
Buildings and equipment - 11,932,804
- 13,993,648
Less accumulated depreciation - 11,601,241
- 2,392,407
Cash 306,127 1,222,223
Other assets 12,366 264,343
$ 318,493 $ 3,878,973
<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
<S> <C> <C>
Unclaimed distribution checks $ - $ 170,164
Accounts payable and accrued expenses 288,046 48,073
Liabilities to general partner - 2,143,209
288,046 2,361,446
PARTNERS' CAPITAL
General partner 1,527 368,257
Limited partners - 30,004 units of
limited partnership interest 28,920 1,149,270
30,447 1,517,527
$ 318,493 $ 3,878,973
See Notes to Financial Statements.
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Continental Real Estate Partners, Ltd.
STATEMENTS OF OPERATIONS (UNAUDITED)
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Operating revenue
Rental income $ 80,881 $ 120,572 $ 201,454 $ 242,600
Other, principally operating
expense reimbursements 15,994 - 15,994 200
96,875 120,572 217,448 242,800
Operating expense
Depreciation 68,293 101,102 170,733 201,489
Repairs and maintenance 8,020 10,187 17,084 23,870
Insurance 15,671 23,687 40,403 47,374
Real estate taxes 11,490 18,134 29,651 36,267
Utilities 9,330 6,216 11,098 12,522
Professional services 38,862 11,176 44,862 17,533
Property management fees 10,636 9,102 19,738 18,206
Commissions 2,018 3,027 5,045 6,054
Investor communications 1,080 1,080 2,520 2,160
Other 5,637 5,077 16,612 11,855
171,037 188,788 357,746 377,330
Operating loss (74,162) (68,216) (140,298) (134,530)
Gain on sale of Lakeland
Mall 6,097,358 - 6,097,358 -
Incentive fee to general
partner (849,631) - (849,631) -
Liquidation expense (250,000) - (250,000) -
Interest income 59,745 12,835 73,121 25,779
NET INCOME (LOSS) $4,983,310 $ (55,381) $4,930,550 $(108,751)
Net loss allocated to
General partner $ 249,165 $ (2,769) $ 246,528 $ (5,438)
Limited partners -
$156.11 and $(3.44) net income
loss) per unit of limited
partnership Interest
outstanding for the six
months ended June 30, 1998
and 1997, respectively 4,734,145 (52,612) 4,684,022 (103,313)
$4,983,310 $ (55,381) $4,930,550 $(108,751)
See Notes to Financial Statements.
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Continental Real Estate Partners, Ltd.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (UNAUDITED)
Six months ended June 30,
<CAPTION>
1998 1997
General Limited General Limited
Partner Partner Partner Partner
<S> <C> <C> <C> <C>
Beginning balance $368,257 $1,149,270 $380,796 $1,387,511
NET INCOME (LOSS) 246,528 4,684,022 (5,438) (103,313)
Unclaimed distribution checks - 173,323 - -
Partner distributions (613,258) (5,977,695) - -
Ending balance $ 1,527 $ 28,920 $375,358 $1,284,198
Balance, June 30, 1998,
and 1997, per unit of
limited partnership
interest $ 0.96 $ 42.80
See Notes to Financial Statements.
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<TABLE>
Continental Real Estate Partners, Ltd.
STATEMENTS OF CASH FLOWS (UNAUDITED)
Six months ended June 30,
<CAPTION>
1998 1997
<S> <C> <C>
Operating activities
Net income (loss) $4,930,550 $(108,751)
Adjustments to reconcile net loss to
cash provided by operating activities:
Depreciation and amortization 175,778 207,543
Gain (loss) on sale of assets (5,247,727) -
Decrease in other assets 69,654 55,803
Increase (decrease) in accounts payable
and accrued expenses (25,668) 26,893
Deferred revenue - 42,602
Net cash flow provided (used) by
operating activities (97,413) 224,090
Cash flows from investing activities
Real estate redevelopment costs - (5,038)
Proceeds from sale of fixed assets 7,646,679 -
Net cash flow provided (used) by
investing activities 7,646,679 (5,038)
Cash flows from financing activities
Liquidation reserve 250,000 -
Unclaimed distribution checks 173,323 -
Accrued general partner incentive
fees paid (2,127,568) -
Distributions to general partner (613,258) -
Distributions to limited partner (5,977,695) -
Net cash flow used by investing
activities (8,295,198) -
NET INCREASE (DECREASE) IN CASH (745,932) 219,052
Balance of cash, beginning of period 1,052,059 1,065,816
Balance of cash, end of period $ 306,127 $1,284,868
See Notes to Financial Statements.
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<PAGE>
Continental Real Estate Partners, Ltd.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the six month period ended June 30, 1998 are not
necessarily indicative of the results that may be expected for the
year ended December 31, 1998. For further information, refer to the
financial statements and footnotes thereto included in the company's
annual report on Form 10-K for the year ended December 31, 1997.
NOTE B - DECEMBER 31, 1997 STATEMENT OF ASSETS, LIABILITIES AND
PARTNERS' CAPITAL
The statement of assets, liabilities and partners' capital at December
31, 1997 has been derived from the audited financial statements at
that date.
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<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON INTERIM FINANCIAL INFORMATION
The Bayberry Group, Inc.
Sole General Partner of
Continental Real Estate Partners, Ltd.
The accompanying statement of assets, liabilities and partners' capital
of Continental Real Estate Partners, Ltd. (a Massachusetts limited
partnership) as of June 30, 1998 and the related statements of
operations for the three and six month period ended June 30, 1998 and
the statement of cash flows and changes in partners' capital for the six
month periods ended June 30, 1998 and 1997 were not audited by us and,
accordingly, we do not express an opinion on them.
The accompanying statement of assets and liabilities for the year ended
December 31, 1997 was audited by us, and we expressed an unqualified
opinion on it in our report dated January 16, 1998, but we have not
performed any auditing procedures since that date.
Traverse City, Michigan
August 25, 1998
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<PAGE>
The Bayberry Companies
September, 1998
To Our Partners:
Please excuse our delay in sending additional information for the six
months ended June 30, 1998 to you.
During the quarter, we achieved what we had long sought to achieve --
the sale of the Partnership's last property. We are pleased to have
achieved that milestone, as the market conditions in downtown Lakeland,
until recently, seemed to make it an impossible task. We are also
pleased to know that the renovation of the Partnership's former property
will further the revitalization of Lakeland and benefit its people.
As a result of operations, the Partnership had an operating loss for the
quarter of $74,162, which compared to a year prior loss of $68,216. As
a result of operations and the sale, the Partnership had net income of
$4,983,310. More detailed information was contained in the special
report we sent to you before the sale and is contained in the statements
accompanying this report.
Since the time we sent our special report and distribution, several
partners have contacted us with inquiries as to the prospective tax
treatment of the sale. For that reason, we asked the Partnership's
accountants to include a note entitled "1998 Preliminary Income Tax
Information" with the statements. We believe that note, with your own
records, should allow you to plan for taxes now. We will, of course,
send detailed year-end information to you.
On a personal note, we wish to extend our thanks to those of you who
have called or written to offer a congratulatory note. Your
thoughtfulness was and is appreciated.
Sincerely,
Robert A. Kuras Shirley K. Debelack
PLANNING, BUILDING AND MANAGING WITH NATURE
Wood Ridge Road - Glen Arbor - Michigan - 49636 - 616-334-6400
<PAGE>
CONTINENTAL REAL ESTATE PARTNERS, LTD.
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
The company did not file any reports on Form 8-K during the three
months ended June 30, 1998.
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<PAGE>
CONTINENTAL REAL ESTATE PARTNERS, LTD.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CONTINENTAL REAL ESTATE PARTNERS, LTD.
Date
Robert A. Kuras, Principal Financial
Officer and President of
The Bayberry Group, Inc.
Sole General Partner
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[ARTICLE] 5
[CIK] 0000024148
[NAME] CONTINENTAL REAL ESTATE PARTNERS LTD
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<S> <C> <C>
[PERIOD-TYPE] 3-MOS 6-MOS
[FISCAL-YEAR-END] DEC-31-1998 DEC-31-1998
[PERIOD-END] JUN-30-1998 JUN-30-1998
[CASH] 306127 306127
[SECURITIES] 0 0
[RECEIVABLES] 0 0
[ALLOWANCES] 0 0
[INVENTORY] 0 0
[CURRENT-ASSETS] 12366 12366
[PP&E] 0 0
[DEPRECIATION] 0 0
[TOTAL-ASSETS] 318493 318493
[CURRENT-LIABILITIES] 288046 288046
[BONDS] 0 0
[PREFERRED-MANDATORY] 0 0
[PREFERRED] 0 0
[COMMON] 0 0
[OTHER-SE] 30447 30447
[TOTAL-LIABILITY-AND-EQUITY] 318493 318493
[SALES] 5404347 5538296
[TOTAL-REVENUES] 5404347 5538296
[CGS] 0 0
[TOTAL-COSTS] 171037 357746
[OTHER-EXPENSES] 250000 250000
[LOSS-PROVISION] 0 0
[INTEREST-EXPENSE] 0 0
[INCOME-PRETAX] 4983310 4930550
[INCOME-TAX] 0 0
[INCOME-CONTINUING] 4983310 4930550
[DISCONTINUED] 0 0
[EXTRAORDINARY] 0 0
[CHANGES] 0 0
[NET-INCOME] 4983310 4930550
[EPS-BASIC] 157.78 156.11
[EPS-DILUTED] 157.78 156.11
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