United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(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: 0-10222
QUALIFIED PROPERTIES 80, L.P.
--------------------------------
Exact Name of Registrant as Specified in its Charter
Virginia
----------- 13-3046808
State or Other Jurisdiction of --------------
Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson
- ------------------------------------ 10285
Address of Principal Executive Offices -------
Zip Code
(212) 526-3237
----------------
Registrant's Telephone Number, Including Area Code
Indicate by check mark whether the 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 ____
Consolidated Balance Sheets At September 30, At December 31,
1996 1995
Assets
Real estate:
Land $ 3,642,847 $ 3,642,847
Buildings and improvements 21,136,511 21,780,615
24,779,358 25,423,462
Less accumulated depreciation (10,253,380) (10,186,201)
14,525,978 15,237,261
Cash and cash equivalents 417,584 1,062,602
Cash restricted 140,383 115,521
557,967 1,178,123
Prepaid expenses, net of accumulated
amortization of $254,497 in 1996 and
$409,161 in 1995 469,759 456,924
Rent and other receivables 47,281 31,458
Deferred rent receivable 435,177 423,953
Total Assets $ 16,036,162 $ 17,327,719
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 217,466 $ 182,346
Prepaid rent 17,006 _
Due to affiliates 5,327 10,938
Security deposits payable 68,288 68,288
Distribution payable 339,817 339,817
Mortgage note payable 4,039,557 4,098,403
Total Liabilities 4,687,461 4,699,792
Minority interest 22,605 25,519
Partners' Capital (Deficit):
General Partners (131,385) (123,029)
Limited Partners (51,234 units outstanding) 11,457,481 12,725,437
Total Partners' Capital 11,326,096 12,602,408
Total Liabilities and Partners' Capital $ 16,036,162 $ 17,327,719
Consolidated Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1996
General Limited
Partners Partners Total
Balance at December 31, 1995 $(123,029) $12,725,437 $12,602,408
Net income 21,651 202,460 224,111
Distributions (30,007) (1,470,416) (1,500,423)
Balance at September 30, 1996 $(131,385) $11,457,481 $11,326,096
Consolidated Statements of Operations
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
Income
Rental $ 856,346 $ 743,573 $2,552,537 $2,651,717
Other 183,158 204,168 329,289 397,716
Interest 3,066 11,927 16,172 59,514
Total income 1,042,570 959,668 2,897,998 3,108,947
Expenses
Property operating 458,451 388,682 1,280,167 1,240,000
Depreciation and
amortization 310,061 353,718 933,491 1,112,294
Interest 106,392 108,390 320,720 326,561
General and administrative 36,476 35,427 142,423 107,591
Total expenses 911,380 886,217 2,676,801 2,786,446
Income before minority
interest and gain on sale
of real estate 131,190 73,451 221,197 322,501
Minority interest in loss of
consolidated venture (448) 561 2,914 1,902
Income before gain on sale
of real estate 130,742 74,012 224,111 324,403
Gain on sale of real estate - - - 1,838,645
Net Income $ 130,742 $ 74,012 $ 224,111 $ 2,163,048
Net Income Allocated:
To the General Partners $ 3,180 $ 1,325 $ 21,651 $ 28,612
To the Limited Partners 127,562 72,687 202,460 2,134,436
$ 130,742 $ 74,012 $ 224,111 $ 2,163,048
Per limited partnership unit
(51,234 outstanding) $2.49 $1.42 $3.95 $41.66
Consolidated Statements of Cash Flows
For the nine months ended September 30, 1996 1995
Cash Flows From Operating Activities:
Net income $ 224,111 $ 2,163,048
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 856,693 986,593
Amortization 76,798 125,701
Gain on sale of real estate - (1,838,645)
Minority interest in loss
of consolidated venture (2,914) (1,902)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Cash restricted (24,862) 22,223
Prepaid expenses (89,633) (296,991)
Rent and other receivables (15,823) 43,059
Deferred rent receivable (11,224) (123,580)
Accounts payable and accrued expenses 35,120 (42,814)
Prepaid rent 17,006 -
Due to affiliates (5,611) 1,333
Security deposits payable - (20,676)
Net cash provided by operating activities 1,059,661 1,017,349
Cash Flows From Investing Activities:
Proceeds from sale of real estate - 2,982,138
Additions to real estate (145,410) (610,820)
Net cash provided by (used for) investing activities (145,410) 2,371,318
Cash Flows From Financing Activities:
Distributions paid to partners (1,500,423) (3,772,854)
Principal payments on mortgage note payable (58,846) (53,005)
Net cash used for financing activities (1,559,269) (3,825,859)
Net decrease in cash and cash equivalents (645,018) (437,192)
Cash and cash equivalents, beginning of period 1,062,602 1,468,010
Cash and cash equivalents, end of period $ 417,584 $ 1,030,818
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 320,720 $ 326,561
Supplemental Disclosure of Non-Cash Investing
Activities:
Write-off of fully depreciated tenant improvements $ 789,514 $ 310,659
Tenant improvements funded through accounts payable $ - $ 61,901
Notes to the Consolidated Financial Statements
The unaudited consolidated financial statements should be read in conjunction
with the Partnership's annual 1995 audited consolidated financial statements
within Form 10-K.
The unaudited consolidated financial statements include all adjustments
which are, in the opinion of management, necessary to present a fair
statement of financial position as of September 30, 1996 and the results of
operations for the three and nine months ended September 30, 1996 and 1995,
and cash flows for the nine months ended September 30, 1996 and 1995, and the
statement of partners' capital (deficit) for the nine months ended
September 30, 1996. Results of operations for the period are not necessarily
indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1995, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10- 01, Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
- -------------------------------
The Partnership had cash and cash equivalents totaling $417,584 at September
30, 1996, compared with $1,062,602 at December 31, 1995. The decrease is
primarily due to the payment of cash distributions, real estate additions and
mortgage principal payments exceeding net cash provided by operating
activities. The cash and cash equivalents balance includes funds held as a
working capital reserve to fund tenant improvements and leasing commissions, in
addition to cash generated from operations. The Partnership also had a
restricted cash balance of $140,383 at September 30, 1996, which consists of
funds reserved for property tax payments.
At 959 Ridgeway Office Building, two leases, with a single tenant, totaling
16,750 square feet or 57% of the property's leasable space, are scheduled to
expire in December 1996. While the tenant has indicated that it will likely
vacate its space, the Partnership has yet to receive formal notice from the
tenant. The General Partners continue to market the property's currently vacant
space and potentially available future space. However, as previously noted,
this is a small property compared to the Partnership's other three properties,
and as such, it is not anticipated that these expirations will materially
affect the Partnership.
Accounts payable and accrued expenses totaled $217,466 at September 30, 1996
compared with $182,346 at December 31, 1995. The increase is largely due to
differences in the timing of invoice payments for the respective periods.
A cash distribution in the amount of $6.50 per Unit will be paid to the Limited
Partners on or about November 15, 1996. This distribution will be funded from
Partnership operations and was declared after a review of the Partnership's
1996 third quarter operations, anticipated future cash needs and current cash
position. During 1997, one large lease is scheduled to expire at Stevens Creek
Office Building and a tenant occupying one half of Swenson Business Park -
Building A may exercise its early termination option. Should these tenants
vacate, it may become necessary to reduce or temporarily suspend quarterly
distributions so that the Partnership has sufficient cash to fund these
re-leasing costs.
Results of Operations
- ---------------------
The Partnership's operations resulted in net income of $130,742 and $224,111
for the three and nine months ended September 30, 1996, respectively, compared
with net income of $74,012 and $2,163,048 for the three and nine months ended
September 30, 1995, respectively. The decrease for the nine-month period is
primarily attributable to the $1,838,645 gain recognized on the March 1, 1995
sale of Diamond Springs Warehouse.
Rental income totaled $856,346 and $2,552,537 for the three and nine months
ended September 30, 1996, respectively, compared with $743,573 and $2,651,717
for the comparable periods a year earlier. The increase for the three-month
period is primarily attributable to a reclassification of tenant reimbursements
for operating expenses from rental income to other income during the comparable
period in 1995. The decrease for the nine-month period is attributable to the
sale of Diamond Springs on March 1, 1995 and the lower occupancy at 959
Ridgeway Office Building. Other income totaled $183,158 and $329,289 for the
three and nine months ended September 30, 1996, respectively, compared with
$204,168 and $397,716 for the comparable periods in 1995. The decrease for the
nine-month period is primarily due to the receipt in 1995 of a non-refundable
deposit associated with the sale of Diamond Springs Warehouse and real estate
tax recovery income at the Diamond Springs property. Interest income totaled
$3,066 and $16,172 for the three and nine months ended September 30, 1996,
respectively, compared with $11,927 and $59,514 for the comparable periods in
1995. The decreases are largely due to lower cash balances maintained in 1996
compared with 1995.
Property operating expenses totaled $458,451 and $1,280,167 for the three and
nine months ended September 30, 1996 compared with $388,682 and $1,240,000 for
the respective 1995 periods. The increases are primarily attributable to
improvements completed in a tenant's space at 889 Ridgelake Office Building for
which the Partnership will be reimbursed in a future period, and a refund to a
tenant at Swenson Business Park - Building A for the overpayment of 1994
operating expenses. Depreciation and amortization declined from $353,718 and
$1,112,294 for the three and nine months ended September 30, 1995,
respectively, to $310,061 and $933,491 for the three and nine months ended
September 30, 1996, respectively, primarily as a result of certain tenant
improvements at 5300 Stevens Creek becoming fully depreciated as of October
1995.
General and administrative expenses totaled $36,476 and $142,423 for the three
and nine months ended September 30, 1996, respectively, versus $35,427 and
$107,591 for the three and nine months ended September 30, 1995. The increase
for the nine-month period is largely due to the payment of 1995 cash
distributions to the coventurers of 5300 Stevens Creek in 1996.
As of September 30, 1996, lease levels at each of the Properties were as
follows: Swenson Business Park-Building A - 100%, Stevens Creek Office Building
- - 100%, 959 Ridgeway Office Building - 68%, and 889 Ridgelake Office Building
- - 100%.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended September 30, 1996.
SIGNATURES
------------
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.
QUALIFIED PROPERTIES 80, L.P.
BY: QP80 REAL ESTATE SERVICES, INC.
General Partner
Date: November 13, 1996 BY: /s/ Kenneth L. Zakin
Director and President
Date: November 13, 1996 BY: /s/William Caulfield
Vice President and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> September-30-1996
<CASH> 417,584
<SECURITIES> 000
<RECEIVABLES> 47,281
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 24,779,358
<DEPRECIATION> (10,253,380)
<TOTAL-ASSETS> 16,036,162
<CURRENT-LIABILITIES> 217,466
<BONDS> 4,039,557
<COMMON> 000
000
000
<OTHER-SE> 11,326,096
<TOTAL-LIABILITY-AND-EQUITY> 16,036,162
<SALES> 2,552,537
<TOTAL-REVENUES> 2,897,998
<CGS> 000
<TOTAL-COSTS> 1,280,167
<OTHER-EXPENSES> 1,075,914
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 320,720
<INCOME-PRETAX> 224,111
<INCOME-TAX> 000
<INCOME-CONTINUING> 224,111
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 224,111
<EPS-PRIMARY> 3.95
<EPS-DILUTED> 3.95
</TABLE>
