<PAGE>
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, 1997
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)
Five Cambridge Center, Cambridge, MA 02142-1493
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
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 / /
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets (Unaudited)
September 30, December 31,
(In Thousands, Except Unit Data) 1997 1996
------------- ------------
Assets
Real Estate Leased to Others:
Accounted for under the operating method, at
cost, net of accumulated depreciation of
$2,344 (1997) and $2,277 (1996) $4,186 $4,253
Accounted for under the financing method 2,590 2,816
------ ------
6,776 7,069
Other Assets:
Cash and cash equivalents 654 491
Other, net of accumulated amortization of
$78 (1997) and $69 (1996) 85 193
------ ------
Total Assets $7,515 $7,753
====== ======
Liabilities and Partners' Capital
Liabilities:
Mortgage notes payable $1,910 $2,142
Accounts payable and accrued expenses 27 104
Distributions payable to partners -- 205
------ ------
Total Liabilities 1,937 2,451
------ ------
Partners' Capital:
Limited Partners-
Units of Limited Partnership Interest,
$1,000 stated value per Unit; authorized
issued and outstanding - 10,005 Units 5,734 5,505
General Partners (Deficit) (156) (203)
------ ------
Total Partners' Capital 5,578 5,302
------ ------
Total Liabilities and Partners' Capital $7,515 $7,753
====== ======
See notes to financial statements.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
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,
1997 1996 1997 1996
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Income:
Rental income from real estate leases accounted
for under the operating method $ 170 $ 187 $ 656 $ 765
Interest on short-term investments 9 13 23 20
Interest income on real estate leases accounted
for under the financing method 84 93 259 283
Gain on sale of property - 1,018 - 1,018
---------- --------- ---------- ---------
Total income 263 1,311 938 2,086
---------- --------- ---------- ---------
Expenses:
Interest 54 72 167 221
Loss due to impairment of real estate - - - 500
Depreciation and amortization 26 31 76 104
Management fees 6 5 18 18
General and administrative 22 20 86 75
---------- --------- ---------- ---------
Total expenses 108 128 347 918
---------- --------- ---------- ---------
Net income $ 155 $ 1,183 $ 591 $ 1,168
========== ========= ========== =========
Net income allocated to general partners $ 12 $ 94 $ 47 $ 93
========== ========= ========== =========
Net incmome allocated to limited partners $ 143 $ 1,089 $ 544 $ 1,075
========== ========= ========== =========
Net income per Unit of Limited
Partnership Interest $ 14.29 $ 108.85 $ 54.37 $ 107.45
========== ========= ========== =========
Distribution per Unit of Limited Partnership Interest $ - $ 109.25 $ 31.48 $ 157.52
========== ========= ========== =========
</TABLE>
See note to financial statements.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Statement of Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
Units of
Limited General Limited
Partnership Partners' Partners' Total
Interest Deficit Capital Capital
----------- --------- --------- --------
Balance - January 1, 1997 10,005 $ (203) $ 5,505 $ 5,302
Distributions - (315) (315)
Net income 47 544 591
----------- --------- --------- --------
Balance - September 30, 1997 10,005 $ (156) $ 5,734 $ 5,578
=========== ========= ========= ========
See notes to financial statements.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Statements of Cash Flows (Unaudited)
For the Nine Months Ended
(In Thousands) September 30, September 30,
1997 1996
------------- --------------
Cash Flows from Operating Activities:
Net Income $ 591 $ 1,168
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 67 95
Amortization 9 9
Loss due to impairment of real estate - 500
Gain on sale of property - (1,018)
Changes in assets and libilities:
Decrease (increase) in other assets 99 (13)
(Decrease) increase in accounts payable and
accrued expenses (77) 19
------- ---------
Net cash provided by operating activities 689 760
------- ---------
Cash Flows From Investing Activities:
Proceeds from sale of property - 1,525
Minimum lease payments received, net of
interest income earned, on leases
accounted for under the financing method 226 203
------- ---------
Cash provided by investing activities 226 1,728
------- ---------
Cash Flows From Financing Activities:
Principal payments on mortgage notes (232) (206)
Cash distributions (520) (668)
Repayment of mortgage note - (459)
------- ---------
Cash used in financing activities (752) (1,333)
------- ---------
Net increase in cash and cash equivalents 163 1,155
Cash and cash equivalents, beginning of period 491 244
------- ---------
Cash and cash equivalents, end of period $ 654 $ 1,399
======= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 167 $ 229
======= =========
Supplemental Disclosure of Non-Cash Financing
Activities:
Accrued Distribution to Partners $ - $ 1,097
======= =========
See notes to financial statements.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
NOTES TO FINANCIAL STATEMENTS
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
annual report on Form 10-KSB for the year ended December 31, 1996.
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, except for the sale
of the Partnership's Greenville, South Carolina property on August
1, 1996. Certain amounts have been reclassified to conform to the
September 30, 1997 presentation. The balance sheet at December 31,
1996 was derived from audited financial statements at such date.
The results of operations for the nine months ended September 30,
1997 and 1996 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 each of the
nine months ended September 30, 1997 and 1996.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Item 2. Management's Discussion and Analysis or Plan of Operations.
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 remaining nine 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 six months and eleven years. The Partnership receives
rental 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 a $163,000 increase at September 30, 1997, as compared
to December 31, 1996. The Partnership's $689,000 of cash provided
by operating activities along with $226,000 of cash provided by
investing activities were only partially offset by $232,000 of cash
used for mortgage payments and $520,000 of partner distributions
(financing activities). At September 30, 1997, the Partnership had
$654,000 in cash reserves. 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. Due to the net and long-term nature of
the original leases, inflation and changing prices have not
significantly affected the Partnership's revenues and net income.
As tenant leases expire, the Partnership expects that inflation and
changing prices will affect the Partnership's revenues. The
Partnership's rental and interest income was sufficient for the
nine months ended September 30, 1997, and is expected to be
sufficient in future periods, to pay the Partnership's operating
expenses and debt service. Upon expiration of tenant leases, the
Partnership will be required to either sell the properties or
procure new tenants. In addition, if the Partnership is unable to
sell such properties prior to their lease expiration, extend the
current leases or re-let the properties upon the expiration of the
lease terms, the Partnership would be responsible for operating
expenses, such as real estate taxes, insurance and utility expenses
associated with the properties. 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. The Managing
General Partner has determined to cease making cash distributions
in light of the J.C. Penney lease expiration on June 1, 1998 and
the related $425,000 balloon payment due February 1, 1998, on the
mortgage note secured by the J.C. Penney property. If, at that
time, the Partnership is unable to extend or refinance the mortgage
note or sell the property, the property could be lost through
foreclosure.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Item 2. Management's Discussion and Analysis or Plan of Operation.
(Continued)
Results of Operations
Net income decreased by $577,000 for the nine months ended
September 30, 1997 as compared to 1996, due to the gain of
$1,018,000 on sale of the Partnership's property located in
Greenville, South Carolina to an affiliate of the tenant at the
property on August 1, 1996, 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. With respect to the
remaining properties, rental income increased by $11,000 for the
nine months ended September 30, 1997, as compared to the prior
comparable period, due to an increase in percentage rents. As a
result of the August 1, 1996 sale of the above property and related
mortgage repayment, interest and depreciation expense decreased for
the nine months ended September 30, 1997, as compared to 1996.
General and administrative expenses increased by $11,000 for the
nine months ended September 30, 1997, as compared to 1996,
primarily due to an increase in certain professional fees. Other
items of income and expense remained relatively constant.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
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:
No reports on Form 8-K were filed during the three months
ended September 30, 1997.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
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.
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
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 11, 1997
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Exhibit Index
Exhibit Page No.
------- --------
27. Financial Data Schedule -
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 12
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<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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 654,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 9,120,000
<DEPRECIATION> (2,344,000)
<TOTAL-ASSETS> 7,515,000
<CURRENT-LIABILITIES> 0
<BONDS> 1,910,000
<COMMON> 0
0
0
<OTHER-SE> 5,578,000
<TOTAL-LIABILITY-AND-EQUITY> 7,515,000
<SALES> 0
<TOTAL-REVENUES> 915,000
<CGS> 0
<TOTAL-COSTS> 94,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 167,000
<INCOME-PRETAX> 591,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 591,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 591,000
<EPS-PRIMARY> 54.37
<EPS-DILUTED> 54.37
</TABLE>
<PAGE>
Exhibit 99
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
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, 1997:
Net income $ 155,000
Add: Depreciation and amortization charges to income
not affecting cash available for distribution 26,000
Minimum lease payments received, net of interest
income earned, on leases accounted for under the
financing method 77,000
Less: Mortgage principal payments (95,000)
Other non-cash income (3,000)
Cash to reserves (160,000)
---------
Cash Available for Distribution $ -
=========
Distributions allocated to General Partners $ -
=========
Distributions allocated to Limited Partners $ -
=========
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, 1997:
Entity Receiving Form of
Compensation Compensation Amount
---------------- ------------ ------
Winthrop
Management Property Management Fees $ 6,000
WFC Realty Co., Inc. Interest in Cash Available
(Initial Limited Partner) for Distribution $ -
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