<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 June 30, 1998
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-9224
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Winthrop Partners 79 Limited Partnership
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(Exact name of small business issuer as specified in its charter)
Massachusetts 04-2654152
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Five Cambridge Center, Cambridge, MA 02142-1493
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(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 JUNE 30, 1998
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------------- --------------------
<S> <C> <C>
Assets
Real Estate Leased to Others:
Accounted for under the operating method,
at cost, net of accumulated depreciation of
$2,409 (1998) and $2,366 (1997) $ 4,121 $ 4,164
Accounted for under the financing method 2,344 2,510
-------------- --------------
6,465 6,674
Other Assets:
Cash and cash equivalents 1,385 769
Other assets, net of accumulated amortization of
$117 (1998) and $111 (1997) 94 175
-------------- --------------
Total Assets $ 7,944 $ 7,618
============== ==============
Liabilities and Partners' Capital
Liabilities:
Mortgage notes payable $ 1,713 $ 1,862
Accounts payable and accrued expenses 27 22
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Total Liabilities 1,740 1,884
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Partners' Capital:
Limited Partners -
Units of Limited Partnership Interest,
$1,000 stated value per Unit; authorized
issued and outstanding - 10,005 Units 6,309 5,877
General Partners' Deficit (105) (143)
-------------- --------------
Total Partners' Capital 6,204 5,734
-------------- --------------
Total Liabilities and Partners' Capital $ 7,944 $ 7,618
============== ==============
</TABLE>
See notes to financial statements.
2 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1998
Statements of Income (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Income:
Rental income from real estate leases accounted
for under the operating method $ 170 $ 244 $ 503 $ 486
Interest on short-term investments 16 8 27 14
Interest income on real estate leases accounted
for under the financing method 78 87 158 175
------------ ------------ ---------- ----------
Total income 264 339 688 675
------------ ------------ ---------- ----------
Expenses:
Operating 17 13 25 20
Interest 50 56 100 113
Depreciation and amortization 24 25 49 50
Management fees 5 6 12 12
General and administrative 16 27 32 44
------------ ------------ ---------- ----------
Total expenses 112 127 218 239
------------ ------------ ---------- ----------
Net income $ 152 $ 212 $ 470 $ 436
============ ============ ========== ==========
Net income allocated to general partners $ 13 $ 17 $ 38 $ 35
============ ============ ========== ==========
Net income allocated to limited partners $ 139 $ 195 $ 432 $ 401
============ ============ ========== ==========
Net income per Unit of Limited
Partnership Interest $ 13.89 $ 19.49 $ 43.18 $ 40.08
============ ============ ========== ===========
Distributions per Unit of Limited Partnership Interest $ - $ 13.39 $ - $ 31.48
============ ============ ========== ===========
</TABLE>
See notes to financial statements.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1998
Statement of Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
Units of
Limited General Limited
Partnership Partners' Partners' Total
Interest Deficit Capital Capital
----------- --------- --------- -------
<S> <C> <C> <C> <C>
Balance - January 1, 1998 10,005 $ (143) $ 5,877 $ 5,734
Net income 38 432 470
--------- --------- --------- ----------
Balance - June 30, 1998 10,005 $ (105) $ 6,309 $ 6,204
========= ========= ========= ==========
</TABLE>
See notes to financial statements.
4 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1998
Statements of Cash Flows (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For The Six Months Ended
June 30, June 30,
1998 1997
----------- ----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 470 $ 436
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 43 44
Amortization 6 6
Changes in assets and liabilities:
Decrease in other assets 82 92
Increase (decrease) in accounts payable
and accrued expenses 5 (72)
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Net cash provided by operating activities 606 506
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Cash Flows From Investing Activities:
Minimum lease payments received, net of interest income
earned, on leases accounted for under the financing method 166 149
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Cash provided by investing activities 166 149
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Cash Flows From Financing Activities:
Principal payments on mortgage notes (149) (137)
Cash distributions - (386)
Loan costs (7) -
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Cash used in financing activities (156) (523)
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Net increase in cash and cash equivalents 616 132
Cash and cash equivalents, beginning of period 769 491
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Cash and cash equivalents, end of period $ 1,385 $ 623
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 97 $ 113
=========== ===========
Supplemental Disclosure of Non-Cash Financing Activities:
Accrued Distribution to Partners $ - $ 134
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</TABLE>
See notes to financial statements.
5 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1998
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, 1997.
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 June 30, 1998 presentation. The
balance sheet at December 31, 1997, was derived from audited
financial statements at such date.
The results of operations for the six months ended June 30, 1998
and 1997, 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 $12,000 during each of the
six months ended June 30, 1998 and 1997.
3. Mortgage Note Payable
The mortgage note encumbering the Batavia, NY property matured on
February 1, 1998, with a balloon payment of $419,000. On February
1, 1998, the Partnership obtained an extension on the mortgage
until May 1, 1998, which was further extended until May 15, 1998.
On May 29, 1998, the partnership renewed the note at a lower
interest rate of 8.32%. The note requires monthly payments of
$5,000 and is being amortized over 10 years. The note matures on
August 31, 1999 (the expiration date of the tenant's lease) with a
balloon payment of approximately $377,000.
4. Contract for Sale of Property
On March 19, 1998, the Partnership entered into a contract to sell
its Chippewa Falls, WI property to the tenant of the property for
$975,000. The sale is expected to close in August 1998. If the sale
is consummated, the Partnership will recognize a gain for financial
reporting purposes.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1998
Item 2. Management's Discussion and Analysis or Plan of Operations
The matters discussed in this Form 10-QSB contain certain
forward-looking statements and involve risks and uncertainties
(including changing market conditions, competitive and regulatory
matters, etc.) detailed in the disclosure contained in this Form
10-QSB and the other filings with the Securities and Exchange
Commission made by the Partnership from time to time. The
discussion of the Partnership's liquidity, capital resources and
results of operations, including forward-looking statements
pertaining to such matters, does not take into account the effects
of any changes to the Partnership's operations. Accordingly, actual
results could differ materially from those projected in the
forward-looking statements as a result of a number of factors,
including those identified herein.
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 one and ten 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 $616,000 increase at June 30, 1998, as compared to
December 31, 1997. The Partnership's $606,000 of cash provided by
operating activities and $166,000 of cash provided by investing
activities were only partially offset by $156,000 of cash used in
financing activities. Financing activities consisted of $149,000 of
mortgage principal payments and $7,000 of loan costs. At June 30,
1998, the Partnership had approximately $1,385,000 in cash and cash
equivalents which has been invested primarily in money market
mutual funds.
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 six
months ended June 30, 1998, 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. The Partnership maintains cash reserves to enable it to
make potential capital improvements required in connection with the
re-letting of the properties.
7 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1998
Item 2. Management's Discussion and Analysis or Plan of Operation
(Continued)
Liquidity and Capital Resources (Continued)
During 1997, the Managing General Partner ceased making
distributions in light of the J.C. Penney lease expiration on
August 31, 1999 and the related $419,000 balloon payment due on the
mortgage note secured by the J.C. Penney property. The mortgage
note matured on February 1, 1998, and was extended until May 15,
1998. On May 29, 1998, the Partnership renewed the note at a lower
interest rate of 8.32%. The note requires monthly payments of
$5,000 and is being amortized over 10 years. The note matures on
August 31, 1999, with a balloon payment of approximately $377,000.
In addition, six of the Partnership's nine properties have primary
lease terms that expire by October 31, 2000. In light of this fact,
the Managing General Partner has decided to increase the
Partnership's reserves until such time that it is known whether or
not these tenants will renew their respective leases.
On May 13, 1998, Walgreen Co. ("Walgreens") occupying the
Partnership's University City, Missouri property exercised their
right to cancel the lease effective February 28, 1999. Walgreens
has since contacted the Managing General Partner requesting that
they be allowed to holdover on a month to month basis. The terms
and conditions of this holdover request are currently being
negotiated. The Managing General Partner anticipates marketing the
property for disposition using a local brokerage firm familiar with
the University City, Missouri sub-market.
On March 19, 1998, the Partnership entered into a contract to sell
its Chippewa Falls, WI property to the tenant of the property for
$975,000. The sale is expected to close during August 1998. If the
sale is consummated, the Partnership will realize approximately
$940,000 in net proceeds and recognize a gain for financial
reporting purposes.
Results of Operations
Net income increased by $34,000 for the six months ended June 30,
1998, as compared to 1997, due to an increase in revenues of
$13,000 and a decrease in expenses of $21,000. Revenues increased
by $13,000, primarily due to an increase in rental income of
$17,000. Rental income increased due to the receipt of $163,000 of
percentage rents in 1998, as compared to $146,000 in 1997. Expenses
declined primarily due to a reduction in general and administrative
expenses of $12,000 and interest expense of $13,000. All other
items of income and expense remained relatively constant.
8 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1998
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 June 30, 1998.
9 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1998
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: August 5, 1998
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1998
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
FORM 10-QSB JUNE 30, 1998
Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement
1. Statement of Cash Available for Distribution for the three
months ended June 30, 1998:
<TABLE>
<S> <C>
Net income $ 152,000
Add: Depreciation and amortization charged to income not
affecting cash available for distribution 24,000
Minimum lease payments received, net of interest
income earned, on leases accounted for under the
financing method 85,000
Less: Mortgage principal payments (74,000)
Cash to Reserves (187,000)
-----------
Cash Available for Distribution $ -
===========
</TABLE>
2. Fees and other compensation paid or accrued by the Partnership
to the General Partners, or their affiliates, during the three
months ended June 30, 1998:
<TABLE>
<CAPTION>
Entity Receiving Form of
Compensation Compensation Amount
---------------- ------------ ------
<S> <C> <C>
Winthrop
Management LLC Property Management Fees $ 5,000
WFC Realty Co., Inc. Interest in Cash Available
(Initial Limited Partner) for Distribution $ -
</TABLE>
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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,385,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 8,874,000
<DEPRECIATION> (2,409,000)
<TOTAL-ASSETS> 7,944,000
<CURRENT-LIABILITIES> 0
<BONDS> 1,713,000
<COMMON> 0
0
0
<OTHER-SE> 6,204,000
<TOTAL-LIABILITY-AND-EQUITY> 7,944,000
<SALES> 0
<TOTAL-REVENUES> 661,000
<CGS> 0
<TOTAL-COSTS> 86,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 100,000
<INCOME-PRETAX> 470,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 470,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 470,000
<EPS-PRIMARY> 43.18
<EPS-DILUTED> 43.18
</TABLE>
