<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1995
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
Commission file number 0-8901
CASA MUNRAS HOTEL PARTNERS, L.P.
(Exact name of small business issuer as specified in its charter)
<TABLE>
<S> <C>
California 95-3235634
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
5525 Oakdale Avenue, Suite 300, Woodland Hills, California 91364
(Address of principal executive offices)
(818) 888-6500
(Issuer's telephone number, including Area Code)
Check whether the issuer: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months, and (2)
has been subject to such filing requirements for the past 90 days.
Yes x No
--- ---
Transitional Small Business Disclosure Format: Yes No x
--- ---
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited financial statements of Casa Munras
Hotel Partners, L.P. (formerly Western Host Monterey Partners) have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB.
Accordingly, these statements do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the General Partners of the
Registrant, all adjustments necessary for a fair presentation have been
included. The financial statements presented herein have been prepared in
accordance with the accounting policies described in the Registrant's Annual
Report on Form 10-KSB for the year ended December 31, 1994 and should be read
in connection therewith. The results of operations for the three and nine
month period ended September 30, 1995 are not necessarily indicative of the
results to be expected for the full year.
1
<PAGE> 3
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 694,164 $ 287,907
Accounts receivable 185,225 89,448
Food and beverage inventories 19,054 16,340
Prepaid expenses 35,790 46,123
----------- ----------
Total current assets 934,233 439,818
----------- ----------
LAND, PROPERTY AND EQUIPMENT - at cost:
Building and improvements 4,409,221 4,405,061
Hotel furnishings and equipment 1,037,166 1,032,648
Restaurant furnishings and equipment 20,931 6,721
Less accumulated depreciation (3,072,280) (2,829,280)
----------- ----------
2,395,038 2,615,150
Land 700,000 700,000
----------- ----------
Land, property and equipment - net 3,095,038 3,315,150
----------- ----------
OTHER ASSETS:
Liquor license 40,000 40,000
Loan commitment fee - net 5,833
----------- ----------
Total other assets 40,000 45,833
----------- ----------
TOTAL $ 4,069,271 $ 3,800,801
=========== ==========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $58,201 $61,594
Accounts payable - related parties 42,932 40,457
Accrued incentive management fees - related parties 92,891 41,342
Accrued salaries and wages 60,234 40,523
Accrued room tax and other 49,626 27,256
Distributions payable 225,000 90,000
Note payable - affiliate 292,697 271,632
----------- ----------
Total liabilities 821,581 572,804
----------- ----------
PARTNERS' EQUITY
General Partners (45 units issued and outstanding) 32,477 32,280
Limited Partners (4,455 units issued and
outstanding) 3,215,213 3,195,717
----------- ----------
Total Partners' equity 3,247,690 3,227,997
----------- ----------
TOTAL $ 4,069,271 $ 3,800,801
=========== ==========
</TABLE>
2
<PAGE> 4
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Room $1,009,249 $923,032 $2,007,203 $1,890,389
Food and beverage 196,286 195,019 475,593 468,384
Lease 21,941 18,343 64,869 62,593
Telephone 18,172 17,304 45,843 30,135
Other 6,678 6,544 12,060 10,525
---------- ---------- --------- ----------
Total 1,252,326 1,160,242 2,605,568 2,462,026
---------- ---------- --------- ----------
OPERATING EXPENSES:
Rooms 229,700 229,273 558,585 575,028
Food and beverage 152,051 153,448 396,354 401,894
Depreciation and amortization 81,833 75,000 248,833 225,000
Administrative and general 90,214 74,927 223,233 191,632
Marketing 63,992 54,209 168,623 164,934
Repairs and maintenance 51,825 43,819 143,067 132,647
Energy cost 40,852 47,207 127,835 127,165
Management fee 113,469 102,244 195,216 176,916
Partnership administration
and professional fees 4,292 3,452 39,157 37,506
Property taxes 18,945 18,513 48,961 47,177
Insurance 12,190 13,547 36,569 40,642
Interest 7,197 6,515 21,065 14,953
Telephone 7,928 5,791 18,377 10,849
---------- ---------- --------- ----------
Total (including reimbursed
costs and payments for
services to related parties
of $138,770 and $115,977
and $368,467 and $366,383
for the three and nine months
ended September 30, 1995 and
1994 respectively) 874,488 827,945 2,225,875 2,146,343
---------- ---------- --------- ----------
NET INCOME $ 377,838 $ 332,297 $ 379,693 $ 315,683
========== ========== ========= ==========
</TABLE>
3
<PAGE> 5
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ALLOCATION OF NET INCOME:
General Partners $3,778 $3,323 $3,797 $3,157
Limited Partners (4,455 Limited
Partnership units outstanding) 374,060 328,974 375,896 312,526
-------- -------- -------- --------
Total $377,838 $332,297 $379,693 $315,683
======== ======== ======== ========
DISTRIBUTION TO PARTNERS $225,000 $180,000 $360,000 $315,000
======== ======== ======== ========
PER UNIT INFORMATION
(based upon 4,500 total
Units outstanding):
Net income $83.96 $73.84 $84.38 $70.15
====== ====== ====== ======
Distribution $50.00 $40.00 $80.00 $70.00
====== ====== ====== ======
</TABLE>
4
<PAGE> 6
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
OPERATING ACITVITIES:
Net income $379,693 $315,683
Adjustments to reconcile net cash provided
by operating activities:
Depreciation and amortization 248,833 225,000
Change in assets and liabilities:
Accounts receivable (95,777) (36,179)
Food and beverage inventories (2,714) 2,095
Prepaid expenses 10,333 (12,316)
Account payable and accrued expenses 92,712 106,151
-------- --------
Net cash provided by operating activities 633,080 600,434
-------- --------
INVESTING ACTIVITIES:
Acquisition of property and equipment (22,888) (489,344)
-------- --------
FINANCING ACTIVITIES:
Note Payable - affiliate 21,065 264,953
Distributions paid to Partners (225,000) (315,000)
Other assets - loan fee (10,000)
-------- --------
Net cash used in financing activities (203,935) (60,047)
-------- --------
NET INCREASE IN CASH 406,257 51,043
CASH AT BEGINNING OF PERIOD 287,907 386,243
-------- --------
CASH AT END OF PERIOD $694,164 $437,286
======== ========
</TABLE>
5
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations for the Three and Nine Months Ended September 30, 1995
and 1994
Occupancy rates at the Registrant's hotel were 90% and 65%
versus 83% and 61% and average room rates were $82.13 and $74.65 versus $80.12
and $74.68, respectively, for the three and nine months ended September 30,
1995 as compared to 1994. The increase in occupancy factors is attributable to
increased pleasure travel during the 1995 summer tourist season as compared to
the similar 1994 period. Food and beverage revenues are primarily based upon
room occupancy factors, and as a result increased slightly for the two 1995
periods.
The Registrant's operating expenses are primarily based upon
occupancy of the hotel and were up from the previous comparable periods at
levels consistent with the occupancy increase. Significant areas of increased
expense have occurred in the administrative and general category due to added
bookkeeping costs; higher management fees, which are based on revenues and
operating profitability; and additional depreciation and amortization as a
result of the ongoing capital addition program.
Liquidity and Capital Resources
The Registrant's primary source of cash is from the operation
and leasing of the hotel facility. The Registrant's primary uses of cash are
to fund hotel operating expenses and renovations and to pay distributions to
Partners.
During the nine months ended September 30, 1995, the
Registrant generated $633,080 in net cash flow from operating activities. In
January 1995, the Registrant distributed $90,000 to Partners in respect of
earnings for the quarter ended December 31, 1994. In June 1995, the General
Partners declared a distribution to Partners of $135,000, which was paid in
July 1995, and in September 1995, the General Partners declared a distribution
to Partners of $225,000, which was paid in October 1995.
Acquisition of property and equipment during the nine months
ended September 30, 1995 totalled $22,888. It is estimated that approximately
$700,000 more will be expended in late 1995 and in 1996 to continue the
renovation of the hotel. Such renovations of property and equipment are
expected to be funded from cash provided by operations and borrowings as
described below. In September 1995, the Registrant obtained an unsecured
credit facility under which the Registrant may borrow up to $900,000 from a
bank. No amounts have been drawn under the credit facility as of September 30,
1995. Borrowings, if made, will be at an annual interest rate equal to the
bank's prime rate plus 1.5%, interest only payable monthly through October 1,
1996, at which time the outstanding principal plus interest are due. A loan
fee of
6
<PAGE> 8
1/2% of the loan commitment ($4,500) was paid to the bank in connection with
the establishment of the credit facility. The General Partners intend to seek
a commitment from the bank to allow the outstanding principal as of October 1,
1996, if any, to be repaid over a four year term. There can be no assurance,
however, that the bank will agree to such an extension. The Partnership
expects to borrow under the credit facility to pay off the $250,000 loan made
to the Partnership in March 1994 by one of the General Partners to fund prior
acquisitions of property and equipment and to finance the ongoing renovation of
the hotel.
The General Partners intend, to the extent cash is available, to continue
making cash distributions to the Partners at amounts approximating the
Registrant's net income.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
10.4 Multiple Disbursement Note dated as of September 28, 1995 by and
between Casa Munras Hotel Partners, L.P. (formerly known as Western
Host Monterey Partners) and City National Bank.
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
None.
7
<PAGE> 9
SIGNATURE
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.
CASA MUNRAS HOTEL PARTNERS, L.P.
By /s/ John F. Rothman
--------------------------
John F. Rothman
General Partner
Dated: November 13, 1995
8
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
------ ----------- ------------
<S> <C>
10.4 Multiple Disbursement Note dated as of September
28, 1995 by and between Casa Munras Hotel
Partners, L.P. (formerly known as Western Host
Monterey Partners and City National Bank.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.4
CITY NATIONAL BANK MULTIPLE DISBURSEMENT NOTE
FIXED MATURITY
(INTEREST TIED TO PRIME)
527-386/# 24241 Note No.
$900,000.00 San Fernando Valley-CBC, # 048 Office
Encino, California
September 28, 1995
For value received, the undersigned, CASA MUNRAS HOTEL PARTNERS, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP ("Borrower"), promises to pay to the order of
CITY NATIONAL BANK, a national banking association ("CNB"), at its office in
this city, in lawful money of the United States of America and in immediately
available funds, the principal sum of NINE HUNDRED THOUSAND AND NO/100 DOLLARS
($900,000.00), or so much thereof as may be advanced and be outstanding, with
interest thereon to be computed on each advance from the date of its
disbursement at a rate computed on the basis of a 360-day year, actual days
elapsed, equal to the "Prime Rate" of CNB, as it exists from time to time, plus
one and a half percent (1.50%) per year. "Prime Rate" shall mean the rate most
recently announced by CNB at its principal office in Beverly Hills, California,
as its "Prime Rate". Any change in the Prime Rate shall become effective on
the same business day on which the Prime Rate shall change, without prior
notice to Borrower.
Advances hereunder, up to the total principal sum stated above, may be
made by CNB at the oral or written request of Borrower up to (but excluding)
October 1, 1996. Each request for an advance hereunder shall be noted in the
books and records of CNB. Advances hereunder shall be conclusively presumed to
have been made to or for the benefit of Borrower when made as noted in such
books and records.
Interest accrued on this Note shall be payable on the 1st day of each
month, commencing November 1, 1995.
The Outstanding principal balance on this Note and any interest
remaining unpaid shall be payable in full on October 1, 1996.
The occurrence of any of the following with respect to any Borrower or
any guarantor of this Note or any general partner of such Borrower or
Guarantor, shall constitute an "Event of Default" hereunder:
1. The failure to make any payment of principal or interest when due
under this Note;
2. The Filing of a petition by or against any of such parties under any
provisions of the Bankruptcy Code;
3. The appointment of a receiver or an assignee for the benefit of
creditors;
<PAGE> 2
4. The commencement of dissolution of liquidation proceedings or the
disqualification of any such parties which is a corporation,
partnership, joint venture or any other type of entity;
5. The death or incapacity of any of such parties who is an individual;
6. The revocation of any guaranty of the Note, or any guaranty becomes
unenforceable as to any future advance under this Note;
7. Any financial statement provided by any of such parties to CNB is
false or misleading;
8. Any default in the payment or performance of any obligation, or any
default under any provisions of any contract or instrument pursuant to
which any of such parties has incurred any obligation for borrowed
money, any purchase obligation or any other liability of any kind to
any person or entity, including CNB;
9. Any sale or transfer of all or a substantial or material part of the
assets of any of such parties other than in the ordinary course of
business; or
10. Any violation, breach or default under any letter agreement, guaranty,
security agreement, deed of trust or any other contract or instrument
executed in connection with this Note or securing this Note.
<PAGE> 3
SUPPLEMENTAL TERMS LETTER
September 28, 1995
CASA MUNRAS HOTEL PARTNERS, L.P.
5525 Oakdale Avenue, #300
Woodland Hills, CA 91364
Attention: John F. Rothman, General Partner
RE: MULTIPLE DISBURSEMENT NOTE FIXED MATURITY DATED
SEPTEMBER 28, 1995, IN THE ORIGINAL PRINCIPAL SUM OF
$900,000.00 ("NOTE") EXECUTED BY CASA MUNRAS HOTEL
PARTNERS, L.P., A CALIFORNIA LIMITED PARTNERSHIP
("BORROWER") IN FAVOR OF CITY NATIONAL BANK, A
NATIONAL BANKING ASSOCIATION ("CNB")
Dear John:
This is to confirm that CNB will extend the credit facility more
completely described in the enclosed Note, subject to the additional terms and
conditions set forth herein. Capitalized terms not defined in this letter have
the meanings given them in the Note. This letter is hereby incorporated into
the Note (this letter and the Note, collectively, the "Note").
A. ADDITIONAL EVENTS OF DEFAULT.
The following shall constitute additional Events of Default under the
Note:
1. Failure of Borrower to furnish CNB, within the times specified, the
following statements:
1.1 Within ninety (90) days after the end of each quarterly
accounting period of each fiscal year, a financial statement
consisting of not less than a balance sheet, and income
statement, prepared in accordance with generally accepted
accounting principles consistently applied, which financial
statement may be internally prepared;
1.2 Within one hundred twenty (120) days after the close of each
fiscal year, a copy of the annual audit report for such year
for Borrower and the Subsidiaries including therein a balance
sheet, income statement, reconciliation of net worth and
statement of cash flows, with notes thereto, the balance
sheet, income statement and statement of cash flows to be
audited by a certified public accountant acceptable to CNB,
and certified by such accountants to have been prepared in
accordance with generally accepted accounting principles
consistently applied and accompanied by Borrower's
certification as to whether any event has occurred which
constitutes an Event of Default, and if so, stating the facts
with respect thereto;
<PAGE> 4
John F. Rothman, General Partner
Casa Munras Hotel Partners, L.P.
September 28, 1995
Page 2
1.3 Quarterly progress reports on the renovation project on the
Casa Munras Hotel, as soon as available, but in no event later
than thirty (30) days after the end of each fiscal quarter;
and
1.4 Such additional information, reports and/or statements as CNB
may, from time to time, reasonably request;
2. Failure of Borrower to maintain the following:
2.1 A ratio of Cash Flow from Operations before Partner's
distributions, to Debt Service of not less than 1.25 to 1 for
each fiscal year.
B. DEFINITIONS.
For purposes of the Note, the following terms have the following
meanings:
"CASH FLOW FROM OPERATIONS" shall be determined on a consolidated
basis for Borrower and the Subsidiaries and shall mean the sum of (a) net
income after taxes earned over the twelve month period ending on the date of
determination, plus (b) amortization of intangible assets, plus (c) interest
expense, plus (d) depreciation expensed during the twelve month period ending
on the date of determination.
"DEBT SERVICE" shall mean (a) the aggregate amount of Current Maturity
of Long Term Debt plus (b) all interest incurred on borrowed money during the
twelve month period ending on the date of determination. "Current Maturity of
Long Term Debt" shall mean that portion of Borrower's consolidated long term
liabilities, determined in accordance with generally accepted accounting
principles consistently applied, which shall, by the terms thereof, become due
and payable within one (1) year following the date of the balance sheet upon
which such calculations are based.
"SUBSIDIARY" shall mean any corporation, the majority of whose voting
shares are at any time owned, directly or indirectly by Borrower and/or by one
or more Subsidiaries.
C. ADDITIONAL TERMS AND CONDITIONS.
The following additional terms and conditions shall also apply to the
Note:
1. FEES. Borrower shall pay to CNB a non-refundable fee equal to
$4,500.00, due and payable in full upon execution of this letter and the Note.
2. ENVIRONMENTAL INDEMNIFICATION. Due to the environmentally
sensitive nature of
<PAGE> 5
John F. Rothman, General Partner
Casa Munras Hotel Partners, L.P.
September 28, 1995
Page 3
the industry in which Borrower is principally engaged and upon which CNB will
rely as its primary source of repayment, and in consideration of CNB extending
credit to Borrower, Borrower has agreed to indemnify CNB against any claims
that may arise as a result of Borrower's business activities that are
environmental in nature and for which CNB may be named as a liable party.
Borrower agrees that it shall indemnify and hold harmless CNB, its
parent company, subsidiaries and all of their respective directors, officers,
employees, agents, successors, attorneys, and assigns from and against any
loss, damage, cost, expense, or liability directly of indirectly arising out of
or attributable to the use, generation, manufacture, production, storage,
release, threatened release, discharge, disposal, or presence of a hazardous
substance on, under, or about Borrower's property or operations or property
leased to Borrower, including but not limited to attorneys' fees (including the
reasonable estimate of the allocated cost of in-house counsel and staff). For
these purposes, the term "hazardous Substances" means any substance which is or
becomes designated as "hazardous" or "toxic" under any Federal, state or local
law. This indemnity shall survive repayment of Borrower's obligations to CNB.
Except for documents and instruments specifically referenced herein or
in the Note, this letter and the Note constitute the entire agreement of the
parties hereto and supersedes any prior or contemporaneous oral or written
agreements, understandings, representations, warranties and negotiations, if
any, which are merged into this letter and the Note. If you agree to accept
the terms of this letter and the Note, please sign the enclosed acknowledgement
copy of this letter, as well as the enclosed Note, and return them to me on or
before October 13, 1995.
Sincerely,
CITY NATIONAL BANK, a national banking association
By: Brad Sims
-----------------------------------------
Brad Sims, Senior Vice President/Manager
By: Francis S. Lim
-----------------------------------------
Francis S. Lim, Vice President
Accepted and Agreed this 2nd day of
October , 1995.
CASA MUNRAS HOTEL PARTNERS, L.P.,
a California limited partnership
By: John F. Rothman
-----------------------------------------
John F. Rothman, General Partner
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 694,164
<SECURITIES> 0
<RECEIVABLES> 185,225
<ALLOWANCES> 0
<INVENTORY> 19,054
<CURRENT-ASSETS> 934,233
<PP&E> 6,167,318
<DEPRECIATION> 3,072,280
<TOTAL-ASSETS> 4,069,271
<CURRENT-LIABILITIES> 821,581
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,247,690
<TOTAL-LIABILITY-AND-EQUITY> 4,069,271
<SALES> 2,605,568
<TOTAL-REVENUES> 2,605,568
<CGS> 0
<TOTAL-COSTS> 2,225,875
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,065
<INCOME-PRETAX> 379,693
<INCOME-TAX> 0
<INCOME-CONTINUING> 379,693
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 379,693
<EPS-PRIMARY> 84.38
<EPS-DILUTED> 0
</TABLE>
