<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 March 31, 2000
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
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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
- ------------------------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Five Cambridge Center, Cambridge, MA 02142-1493
- ------------------------------------------------- ---------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
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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 MARCH 31, 2000
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements.
Balance Sheets (Unaudited)
(In Thousands, Except Unit Data)
March 31, December 31,
2000 1999
--------------------- ---------------------
<S> <C> <C>
Assets
Real Estate Leased to Others:
Accounted for under the operating method,
at cost, net of accumulated depreciation of
$1,950 (2000) and $1,939 (1999) $ 3,700 $ 3,711
Accounted for under the operating method
and held for sale, net of accumulated depreciation
of $557 344 344
Accounted for under the financing method 1,459 1,542
--------------------- ---------------------
5,503 5,597
Other Assets:
Cash and cash equivalents 1,482 1,275
Other assets, net of accumulated amortization of
$130 (2000) and $128 (1999) 15 113
--------------------- ---------------------
Total Assets $ 7,000 $ 6,985
===================== =====================
Liabilities and Partners' Capital
Liabilities:
Mortgage notes payable $ 770 $ 853
Accounts payable and accrued expenses 23 22
Distributions payable to partners 139 152
--------------------- ---------------------
Total Liabilities 932 1,027
--------------------- ---------------------
Partners' Capital:
Limited Partners -
Units of Limited Partnership Interest,
$1,000 stated value per Unit; authorized
issued and outstanding - 10,005 Units 6,176 6,075
General Partners' Deficit (108) (117)
--------------------- ---------------------
Total Partners' Capital 6,068 5,958
--------------------- ---------------------
Total Liabilities and Partners' Capital $ 7,000 $ 6,985
===================== =====================
</TABLE>
See notes to financial statements.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
<TABLE>
<CAPTION>
Statements of Income (Unaudited)
(In Thousands, Except Unit Data)
For The Three Months Ended
March 31, March 31,
2000 1999
------------------- ---------------------
<S> <C> <C>
Income:
Rental income from real estate leases accounted
for under the operating method $ 256 $ 359
Interest on short-term investments 18 20
Interest income on real estate leases accounted
for under the financing method 43 52
------------------- ---------------------
Total income 317 431
------------------- ---------------------
Expenses:
Operating 8 10
Interest 22 39
Depreciation and amortization 13 24
Management fees 6 7
General and administrative 19 13
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Total expenses 68 93
------------------- ---------------------
Net income $ 249 $ 338
=================== =====================
Net income allocated to general partners $ 20 $ 27
=================== =====================
Net income allocated to limited partners $ 229 $ 311
=================== =====================
Net income per Unit of Limited Partnership Interest $ 22.89 $ 31.08
=================== =====================
Distributions per Unit of Limited Partnership Interest $ 12.79 $ 24.19
=================== =====================
</TABLE>
See notes to financial statements.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
<TABLE>
<CAPTION>
Statement of Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
Units of
Limited General Limited Total
Partnership Partners' Partners' Partners'
Interest Deficit Capital Capital
------------------ ------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Balance - January 1, 2000 10,005 $ (117) $ 6,075 $ 5,958
Net income 20 229 249
Distributions (11) (128) (139)
------------------ ------------------- ------------------ -------------------
Balance - March 31, 2000 10,005 $ (108) $ 6,176 $ 6,068
================== =================== ================== ===================
</TABLE>
See notes to financial statements.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
<TABLE>
<CAPTION>
Statements of Cash Flows (Unaudited)
(In Thousands)
For The Three Months Ended
March 31, March 31,
2000 1999
--------------------- ---------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 249 $ 338
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 11 16
Amortization 2 8
Changes in assets and liabilities:
Decrease in other assets 96 7
Increase (decrease) in accounts payable
and accrued expenses 1 (5)
--------------------- ---------------------
Net cash provided by operating activities 359 364
--------------------- ---------------------
Cash Flows From Investing Activities:
Minimum lease payments received, net of interest income
earned, on leases accounted for under the financing method 83 74
--------------------- ---------------------
Cash provided by investing activities 83 74
--------------------- ---------------------
Cash Flows From Financing Activities:
Principal payments on mortgage notes (83) (84)
Cash distributions (152) (167)
--------------------- ---------------------
Cash used in financing activities (235) (251)
--------------------- ---------------------
Net increase in cash and cash equivalents 207 187
Cash and cash equivalents, beginning of period 1,275 1,713
--------------------- ---------------------
Cash and cash equivalents, end of period $ 1,482 $ 1,900
===================== =====================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 22 $ 42
===================== =====================
Supplemental Disclosure of Non-Cash Financing Activities:
Accrued Distribution to Partners $ 139 $ 352
===================== =====================
</TABLE>
See notes to financial statements.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
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, 1999.
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. The balance sheet at
December 31, 1999, was derived from audited financial statements at
such date.
The results of operations for the three months ended March 31, 2000
and 1999, 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 $6,000 and $7,000 for the
three months ended March 31, 2000 and 1999, respectively.
3. Contract for Sale of Property
On February 14, 2000, the Partnership entered into an agreement to
sell the University City, Missouri property to an unaffiliated
third party for approximately $525,000. The purchaser is currently
conducting due diligence on the property. If the property is sold
for $525,000 the Partnership will recognize a gain of approximately
$181,000. There is no debt outstanding associated with this
property.
6 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
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
Of the Partnership's remaining eight properties, seven are leased
to one or more tenants pursuant to net or modified net leases with
remaining lease terms, subject to extensions, ranging between
approximately few months and five years. Two of these properties,
however, have lease terms that expire by January 31, 2001. On March
20, 2000, Lucky Store, Inc. exercised the first renewal option to
extend the lease to June 30, 2005 on the Cedar Rapids, Iowa
property. The eighth property was vacated when the tenant's lease
expired on May 31, 1999 and is currently under contract for sale.
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. With
respect to the vacated property, the Partnership is now responsible
for all operating expenses. On October 29, 1999, the Partnership
received a notice from Wal-Mart Stores that it has elected not to
exercise its option to extend its lease at the Partnership's Mexia,
Texas property. Accordingly, the lease will expire in accordance
with its terms effective October 31, 2000. If the Partnership
cannot sell the property or find a new tenant prior to such date,
the Partnership will be responsible for all costs associated with
the property.
The level of liquidity based on cash and cash equivalents
experienced a $207,000 increase at March 31, 2000, as compared to
March 31, 1999. The Partnership's $359,000 of cash provided by
operating activities and $83,000 of lease payments received under
financing leases (net of interest income) were partially offset by
$235,000 of cash used in financing activities. Financing activities
consisted of $83,000 of mortgage principal payments and $152,000 of
partner distributions. At March 31, 2000, the Partnership had
$1,482,000 in cash and cash equivalents which has been invested
primarily in money market mutual funds. At March 31, 2000, the
Partnership recorded an accrued distribution of $139,000, which
consisted of $128,000 to the limited partners ($12.79 per unit of
limited partnership interest) and $11,000 to the general partner.
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
three months ended March 31, 2000, and is expected to be sufficient
until the current leases expire, to pay the Partnership's operating
expenses and debt service. Upon expiration of tenant leases, the
Partnership will be required to either extend the leases, 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 MARCH 31, 2000
Item 2. Management's Discussion and Analysis or Plan of Operations
(Continued)
Liquidity and Capital Resources (Continued)
In May 1999, Toys "R" Us notified the Partnership that they have
elected to exercise their options to extend their leases at the
same annual rent for five additional years commencing August 1,
2000 on the properties located in Fort Worth and San Antonio,
Texas.
On February 14, 2000, the Registrant entered into a Purchase
Agreement to sell the University City Missouri property to an
unaffiliated third party for approximately $525,000. There is no
debt outstanding associated with this property. If sale is
consummated, the Partnership will recognize a gain for financial
reporting purposes.
Results of Operations
The Registrant's net income decreased by $89,000 for the three
months ended March 31, 2000, as compared to the comparable period
in 1999, due to a decrease in income of $114,000 which was
partially offset by a decrease in expenses of $25,000.
The decrease in income was due to a decrease in interest income on
leases accounted for under the financing method of $9,000, a
decrease in rental income of $103,000 and a decrease in interest
income on short-term investments of $2,000. Rental income decreased
primarily due to the expiration of the Walgreen Co. lease in 1999.
Interest income on leases accounted for under the financing method
decreased by $9,000 primarily due to the amortization of leases
accounted for under the financing method.
Expenses declined by $25,000 primarily due to a reduction in
interest expense of $17,000 resulting from the satisfaction of the
J.C. Penny note in the amount of $376,000 in 1999 and the
amortization of principal balances. Depreciation and amortization
expense decreased by $11,000 primarily due to some assets becoming
fully depreciated and amortized.
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
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 period ended
March 31, 2000.
9 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
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/ Thomas C. Staples
-----------------------------------------------
Thomas C. Staples
Chief Financial Officer
Dated: May 12, 2000
10 of 12
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2000
Exhibit Index
Exhibit Page No.
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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 MARCH 31, 2000
Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement
1. Statement of Cash Available for Distribution for the three
months ended March 31, 2000:
Net income $ 249,000
Add: Depreciation and amortization charged to income not
affecting cash available for distribution 13,000
Minimum lease payments received, net of interest
income earned, on leases accounted for under the
financing method 83,000
Less: Mortgage principal payments (83,000)
Cash to reserves (123,000)
---------
Cash Available for Distribution $ 139,000
===========
Distributions Allocated to General Partners $ 128,000
==========
Distributions Allocated to Limited Partners $ 11,000
==========
2. Fees and other compensation paid or accrued by the Partnership
to the General Partners, or their affiliates, during the three
months ended March 31, 2000:
<TABLE>
<CAPTION>
Entity Receiving Form of
Compensation Compensation Amount
---------------------------- ------------------------------------------- --------------
<S> <C> <C>
Winthrop
Management LLC Property Management Fees $ 6,000
WFC Realty Co., Inc.
(Initial Limited Partner) Interest in Cash Available for Distribution $ 64
One Winthrop Properties, Inc. Interest in Cash Available for Distribution $ 5,000
(General Partner)
Linnaeus-Hampshire Realty
Limited Partnership
(General Partner) Interest in Cash Available for Distribution $ 6,000
</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>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,482,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 8,010,000
<DEPRECIATION> (2,507,000)
<TOTAL-ASSETS> 7,000,000
<CURRENT-LIABILITIES> 0
<BONDS> 770,000
0
0
<COMMON> 0
<OTHER-SE> 6,068,000
<TOTAL-LIABILITY-AND-EQUITY> 7,000,000
<SALES> 0
<TOTAL-REVENUES> 299,000
<CGS> 0
<TOTAL-COSTS> 27,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,000
<INCOME-PRETAX> 249,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 249,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 249,000
<EPS-BASIC> 22.89
<EPS-DILUTED> 22.89
</TABLE>
