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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 0-9224
Winthrop Partners 79 Limited Partnership
(Exact name of small business issuer as specified in its charter)
Massachusetts 04-2654152
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One International Place, Boston, Massachusetts 02110
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 330-8600
Indicate by check mark whether 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_____
1 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP FORM 10-QSB
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
Balance Sheets (Unaudited)
September 30, December 31,
(In Thousands, Except Unit Data) 1996 1995
-------------------- ---------------------
<S> <C> <C>
Assets
Real Estate Leased to Others:
Accounted for under the operating method,
at cost, net of accumulated depreciation
of $2,255 (1996) and $3,208 (1995) $ 4,276 $ 5,378
Accounted for under the financing method 2,887 3,090
-------------------- ---------------------
7,163 8,468
Other Assets:
Cash and cash equivalents 1,399 244
Other, net of accumulated amortization of
$66 (1996) and $57 (1995) 147 143
-------------------- ---------------------
Total Assets $ 8,709 $ 8,855
==================== =====================
Liabilities and Partners' Capital
Liabilities:
Mortgage notes payable $ 2,206 $ 2,871
Accounts payable and accrued expenses 49 30
Distributions payable to partners 1,097 142
-------------------- ---------------------
Total Liabilities 3,352 3,043
-------------------- ---------------------
Partners Capital:
Limited Partners -
Units of Limited Partnership Interest,
$1,000 stated value per Unit; authorized
issued and outstanding - 10,005 Units 5,556 6,057
General Partners (Deficit) (199) (245)
-------------------- ---------------------
Total Partners' Capital 5,357 5,812
-------------------- ---------------------
Total Liabilities and Partners' Capital $ 8,709 $ 8,855
==================== =====================
</TABLE>
See notes to financial statements.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP FORM 10-QSB
SEPTEMBER 30, 1996
Statements of Income (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Income
Rental income from real estate leases accounted
for under the operating method $ 187 $ 209 $ 765 $ 763
Interest on short-term investments 13 3 20 11
Interest income on real estate leases accounted
for under the financing method 93 99 283 302
Gain on sale of property 1,018 -- 1,018 --
------ ------ ------ ------
Total income 1,311 311 2,086 1,076
------ ------ ------ ------
Expenses
Interest 72 75 221 239
Loss due to impairment of real estate -- -- 500 --
Depreciation and amortization 31 37 104 112
Management fees 5 6 18 18
General and administrative 20 5 75 48
------ ------ ------ ------
Total expenses 128 123 918 417
------ ------ ------ ------
Net income $1,183 $ 188 $1,168 $ 659
====== ====== ====== ======
Net income allocated to general partners $ 94 $ 15 $ 93 $ 53
====== ====== ====== ======
Net income allocated to limited partners $1,089 $ 173 $1,075 $ 606
====== ====== ====== ======
Net income per Unit of Limited Partnership Interest $108.85 $17.29 $107.45 $60.57
======= ====== ======= ======
Distribution per Unit of Limited Partnership Interest $109.25 $19.26 $157.52 $67.03
======= ====== ======= ======
</TABLE>
See notes to financial statements.
3 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP FORM 10-QSB
SEPTEMBER 30, 1996
Statement of Partners' Capital (Unaudited)
<TABLE>
<CAPTION>
(In Thousands, Except Unit Data) Units of
Limited General Limited
Partnership Partners' Partners' Total
Interest Deficit Capital Capital
----------------- ------------------- ------------------ --------------------
<S> <C> <C> <C> <C>
Balance - January 1, 1996 10,005 $ (245) $ 6,057 $ 5,812
Distributions (47) (1,576) (1,623)
Net income 93 1,075 1,168
----------------- ------------------- ------------------- --------------------
Balance - September 30, 1996 10,005 $ (199) $ 5,556 $ 5,357
================= =================== =================== ====================
</TABLE>
See notes to financial statements.
4 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP FORM 10-QSB
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Statements of Cash Flows (Unaudited)
For the Nine Months Ended
(In Thousands) September 30, September 30,
1996 1995
-------------------- ---------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 1,168 $ 659
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 104 112
Loss due to impairment of real estate 500 -
Minimum lease payments received, net of interest income
earned, on leases accounted for under the financing method 203 172
Changes in assets and liabilities:
(Increase) decrease in other assets (13) 41
Increase in accounts payable and accrued expenses 19 9
Gain on sale of property (1,018) -
-------------------- ---------------------
Net cash provided by operating activities 963 993
-------------------- ---------------------
Cash Flows From Investing Activities:
Improvements to property - (13)
Proceeds from sale of property 1,525 -
-------------------- ---------------------
Cash provided by (used in) investing activities 1,525 (13)
-------------------- ---------------------
Cash Flows From Financing Activities:
Principal payments on mortgage notes (206) (175)
Repayment of mortgage note (459) -
Cash distributions (668) (725)
-------------------- ---------------------
Cash used in financing activities (1,333) (900)
-------------------- ---------------------
Net increase in cash and cash equivalents 1,155 80
Cash and cash equivalents, beginning of period 244 193
-------------------- ---------------------
Cash and cash equivalents, end of period $ 1,399 $ 273
==================== =====================
Supplemental Disclosure of Cash Flow Information -
Cash paid for interest $ 229 $ 266
==================== =====================
</TABLE>
See notes to financial statements.
5 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP - FORM 10 - QSB
SEPTEMBER 30, 1996
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. General
The accompanying financial statements, footnotes and discussions
should be read in conjunction with the financial statements,
related footnotes and discussions contained in the Partnership's
report on Form 10-K for the year ended December 31, 1995.
The financial information contained herein is unaudited. In the
opinion of management, all adjustments necessary for a fair
presentation of such financial information have been included. All
adjustments are of a normal recurring nature. Certain amounts have
been reclassified to conform to the September 30, 1996
presentation. The balance sheet at December 31, 1995 was derived
from audited financial statements at such date.
The results of operations for the three and nine months ended
September 30, 1996 and 1995 are not necessarily indicative of the
results to be expected for the full year.
2. Related Party Transactions
Management fees paid or accrued by the Partnership to an affiliate
of the Managing General Partner, totaled $18,000 during the nine
months ended September 30, 1996 and 1995.
3. Accounting Change
On January 1, 1996, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of", which requires impairment losses to be recognized
for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not
sufficient to recover the asset's carrying amount. The impairment
loss is measured by comparing the fair value of the asset to its
carrying amount.
In June 1996, the Partnership determined that based upon current
economic conditions and projected operational cash flow the
decline in value of the Partnership's property located in Hurst,
Texas was other than temporary and that recovery of its carrying
value was not likely. Accordingly, a loss for impairment of value
of $500,000 was recognized by the Partnership to reduce the
property's carrying value to an amount equal to its estimated fair
value.
4. Sale of Property
The Partnership sold its property located in Greenville, South
Carolina to an affiliate of the tenant at the property on August
1, 1996 for $1,525,000, resulting in a gain of $1,018,000. Net
proceeds of $1,040,000 from the sale is expected to be distributed
to the partners.
6 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP - FORM 10 - QSB
SEPTEMBER 30, 1996
Item 2. Management's Discussion and Analysis or Plan of Operation.
This Item should be read in conjunction with the financial statements and other
items contained elsewhere in the report.
Liquidity and Capital Resources
All of the Partnership's properties are leased to one or more tenants pursuant
to net or modified net leases with remaining lease terms, subject to
extensions, ranging between approximately one and eleven years. The Partnership
receives rental income and interest income from its properties which is its
primary source of liquidity. Pursuant to the terms of the leases, the tenants
are responsible for substantially all of the operating expenses with respect to
the properties including, maintenance, capital improvements, insurance and
taxes.
The level of liquidity based on cash and cash equivalents experienced an
$1,155,000 increase at September 30, 1996, as compared to December 31, 1995.
The Partnership's $963,000 of cash provided by operating activities along with
$1,525,000 of cash provided by investing activities from the sale of its
Greenville, South Carolina property were only partially offset by $665,000 of
cash used for mortgage payments and $668,000 of partner distributions
(financing activities). The Partnership invests its working capital reserves in
a money market mutual fund.
The Partnership requires cash primarily to pay principal and interest on its
mortgage indebtedness, management fees and general and administrative expenses.
The Partnership's rental and interest income was sufficient for the nine months
ended September 30, 1996, and is expected to be sufficient in future periods,
to pay the Partnership's operating expenses. Upon expiration of tenant leases
the Partnership will be required to either sell the properties or procure new
tenants. The Partnership maintains cash reserves to enable it to make potential
capital improvements required in connection with the re-letting of the
properties.
The Partnership has continued to make quarterly distributions to its partners
from operating revenue since inception. It is expected that a distribution of
approximately $1,100,000 (which includes $1,040,000 of net proceeds from the
aforementioned sale) will be made in the fourth quarter of 1996. The Managing
General Partner is evaluating the propriety of future cash distributions at
their current level, or at all, in light of the J.C. Penney lease expiration on
February 1, 1998 and balloon payments comnig due on mortgages. On February 1,
1998, the mortgage note secured by the J.C. Penney property matures with a
balloon payment due of approximately $425,000. Additional balloon payments are
required on Partnership properties between 1999 and 2010. If, at that time, the
Partnership is unable to extend or refinance the mortgage notes or sell the
properties, the properties could be lost through foreclosure.
7 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP - FORM 10 - QSB
SEPTEMBER 30, 1996
Item 2. Management's Discussion and Analysis or Plan of Operation.
(Continued)
Results of Operations
Net income increased by $509,000 for the nine months ended September 30, 1996
as compared to 1995, due to the gain on sale of property of $1,018,000, which
was only partially offset by a $500,000 loss for impairment of value recorded
in June, 1996 on the Partnership's property located in Hurst, Texas. Net income
increased by $995,000 for the three months ended September 30, 1996 as compared
to 1995 as a result of the aforementioned gain on sale of property. Rental
income decreased by $22,000 for the three months ended September 30, 1996, as
compared to the prior comparable period, due to the sale of the Partnership's
property located in Greenville, South Carolina. General and administrative
expenses increased for the nine months ended September 30, 1996, as compared to
1995, due to an increase in professional fees and related costs. Interest
expense decreased for the nine months ended September 30, 1996 as compared to
1995 as a result of the August 1, 1996 mortgage repayment related to the sale
of the above property. Other expenses remained relatively constant.
8 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP - FORM 10 - QSB
SEPTEMBER 30, 1996
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedule
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement.
(b) Reports on Form 8-K:
On September 23, 1996 a current report on Form 8-K was filed
with respect to the Registrant's change of Independent
Auditors.
9 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP - FORM 10-QSB
SEPTEMBER 30, 1996
SIGNATURES
Pursuant to the requirements 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.
BY: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
BY: /s/ Michael L. Ashner
------------------------------------
Michael L. Ashner
Chief Executive Officer and Director
BY: /s/ Edward V. Williams
-------------------------------------
Edward V. Williams
Chief Financial Officer
Dated: November 4, 1996
10 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
SEPTEMBER 30, 1996
Exhibit Index
Exhibit Page No.
------- --------
27. Financial Data Schedule -
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 12
11 of 12
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Exhibit 99
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
SEPTEMBER 30, 1996
Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement
1. Statement of Cash Available for Distribution for the three months ended
September 30, 1996:
Net Income $ 1,183,000
Add:Depreciation and amortization charges to income not
affecting cash available for distribution 31,000
Minimum lease payments received, net of interest
income earned, on leases accounted for under the
financing method 70,000
Net proceeds from sale of property 1,040,000
Other 5,000
Less:Mortgage principal payments (64,000)
Gain on sale of property (1,018,000)
Cash to Reserves (150,000)
-----------
Cash Available for Distribution $ 1,097,000
===========
Distributions allocated to General Partners $ 4,000
===========
Distributions allocated to Limited Partners $ 1,093,000
===========
2. Fees and other compensation paid or accrued by the Partnership to the
General Partners, or their affiliates, during the three months ended
September 30, 1996:
Entity Receiving Form of
Compensation Compensation Amount
- ------------------------- ------------------------------------------- ------
Winthrop
Management Property Management Fees $5,000
General Partners Interest in Cash Available for Distribution $4,000
WFC Realty Co., Inc.
(Initial Limited Partner) Interest in Cash Available for Distribution $ 548
12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Winthrop
Partners 79 Limited Partnership and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,399,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 9,418,000
<DEPRECIATION> (2,255,000)
<TOTAL-ASSETS> 8,709,000
<CURRENT-LIABILITIES> 0
<BONDS> 2,206,000
<COMMON> 0
0
0
<OTHER-SE> 5,357,000
<TOTAL-LIABILITY-AND-EQUITY> 8,709,000
<SALES> 0
<TOTAL-REVENUES> 2,066,000
<CGS> 0
<TOTAL-COSTS> 622,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 221,000
<INCOME-PRETAX> 1,168,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,168,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,168,000
<EPS-PRIMARY> 107.45
<EPS-DILUTED> 107.45
</TABLE>
