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 March 31, 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 March 31, At December 31,
1996 1995
Assets
Real estate:
Land $ 3,642,847 $ 3,642,847
Buildings and improvements 21,067,828 21,780,615
24,710,675 25,423,462
Less accumulated depreciation (9,685,457) (10,186,201)
15,025,218 15,237,261
Cash and cash equivalents 429,953 1,062,602
Cash restricted 106,161 115,521
536,114 1,178,123
Prepaid expenses, net of accumulated
amortization of $203,851 in 1996 and
$409,161 in 1995 416,412 456,924
Rent and other receivables 44,637 31,458
Deferred rent receivable 435,972 423,953
Total Assets $ 16,458,353 $ 17,327,719
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 138,393 $ 182,346
Prepaid rent 17,084 _
Due to affiliates 16,610 10,938
Security deposits payable 68,288 68,288
Distribution payable 339,817 339,817
Mortgage note payable 4,079,298 4,098,403
Total Liabilities 4,659,490 4,699,792
Minority interest 23,554 25,519
Partners' Capital (Deficit):
General Partners (139,570) (123,029)
Limited Partners (51,234 units outstanding) 11,914,879 12,725,437
Total Partners' Capital 11,775,309 12,602,408
Total Liabilities and Partners' Capital $ 16,458,353 $ 17,327,719
Consolidated Statement of Partners' Capital (Deficit)
- - -----------------------------------------------------
For the three months ended March 31, 1996
General Limited
Partners Partners Total
Balance at December 31, 1995 $ (123,029) $12,725,437 $12,602,408
Net loss (126) (6,184) (6,310)
Distributions (16,415) (804,374) (820,789)
Balance at March 31, 1996 $ (139,570) $11,914,879 $11,775,309
Consolidated Statements of Operations
- - --------------------------------------
For the three months ended March 31, 1996 1995
Income
Rental $ 845,037 $ 924,463
Other 72,017 129,442
Interest 10,232 30,095
Total income 927,286 1,084,000
Expenses
Property operating 441,410 429,508
Depreciation and amortization 314,921 375,453
Interest 107,417 109,313
General and administrative 71,813 36,123
Total expenses 935,561 950,397
Income (loss) before minority interest and
gain on sale of real estate (8,275) 133,603
Minority interest in loss of consolidated venture 1,965 2,463
Income (loss) before gain on sale of real estate (6,310) 136,066
Gain on sale of real estate _ 1,838,645
Net Income (Loss) $ (6,310) $1,974,711
Net Income (Loss) Allocated:
To the General Partners $ (126) $ 21,107
To the Limited Partners (6,184) 1,953,604
$ (6,310) $1,974,711
Per limited partnership unit
(51,234 outstanding) $(.12) $38.13
Consolidated Statements of Cash Flows
- - --------------------------------------
For the three months ended March 31, 1996 1995
Cash Flows From Operating Activities
Net income (loss) $ (6,310) $ 1,974,711
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 314,921 375,453
Gain on sale of real estate _ (1,838,645)
Minority interest in loss of consolidated
venture (1,965) (2,463)
Increase (decrease) in cash arising from
changes in operating assets and liabilities
Cash restricted 9,360 46,557
Prepaid expenses 14,361 (141,137)
Rent and other receivables (13,179) (3,843)
Deferred rent receivable (12,019) (118,133)
Accounts payable and accrued expenses (43,953) 108,653
Prepaid rent 17,084 33,746
Due to affiliates 5,672 (906)
Security deposits payable _ (15,676)
Net cash provided by operating activities 283,972 418,317
Cash Flows From Investing Activities
Proceeds from sale of real estate _ 2,938,516
Additions to real estate (76,727) (402,098)
Net cash provided by (used for) investing activities (76,727) 2,536,418
Cash Flows From Financing Activities
Distributions paid to partners (820,789) (429,336)
Principal payments on mortgage note payable (19,105) (17,209)
Net cash used for investing activities (839,894) (446,545)
Net increase (decrease) in cash and cash equivalents (632,649) 2,508,190
Cash and cash equivalents, beginning of period 1,062,602 1,468,010
Cash and cash equivalents, end of period $ 429,953 $ 3,976,200
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 107,417 $ 109,313
Supplemental Disclosure of Non Cash Investing
Activities
Write-off of fully depreciated tenant improvements $ 789,514 $ 310,659
Notes to the Consolidated Financial Statements
- - ----------------------------------------------
The unaudited financial statements should be read in conjunction with the
Partnership's annual 1995 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of March 31, 1996 and the results of operations and cash flows for
the three months ended March 31, 1996 and 1995 and the statement of changes in
partners' capital (deficit) for the three months ended March 31, 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 $429,953 at March 31,
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 $106,161 at March 31, 1996, which consists of security deposits and
funds reserved for property tax payments.
A tenant occupying 9,344 square feet or 32% of the 959 Ridgeway Office
Building's leasable space vacated the premises upon expiration of its lease. A
second tenant, leasing 3,143 square feet or approximately 9% of the property's
leasable area pursuant to a lease which expired March 31, 1996, continues to
occupy its space on a month-to- month basis. As a result, the property was 68%
leased at the end of the first quarter. The General Partners are currently
marketing the property's vacant space. The property's two other leases are
scheduled to expire in December 1996. While the General Partners have
contacted these two tenants regarding lease renewals, it is uncertain whether
they will renew.
Prepaid expenses totaled $416,412 at March 31, 1996 compared with $456,924 at
December 31, 1995. The decrease is primarily attributable to the amortization
of prepaid insurance and leasing commissions. Accounts payable and accrued
expenses totaled $138,393 at March 31, 1996 compared with $182,346 at December
31, 1995. The decrease 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 May 15, 1996. This distribution will be funded from
Partnership operations and was declared after a review of the Partnership's
1996 first quarter operations, anticipated future cash needs and current cash
position.
Results of Operations
- - ----------------------
The Partnership's operations resulted in a net loss of $6,310 for the three
months ended March 31, 1996, compared with net income of $1,974,711 for the
three months ended March 31, 1995. The change from net income to net loss is
primarily attributable to the $1,838,645 gain recognized on the March 1, 1995
sale of Diamond Springs Warehouse.
Rental income totaled $845,037 for the three months ended March 31, 1996,
compared with $924,463 a year earlier. The decrease is attributable to the
sale of Diamond Springs on March 1, 1995 and lower occupancy at 959 Ridgeway
Office Building. Other income totaled $72,017 for the three months ended March
31, 1996, compared with $129,442 for the comparable period in 1995. The
decrease 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.
Property operating expenses totaled $441,410 for the three months ended March
31, 1996, relatively unchanged from $429,508 from the comparable 1995 period.
Depreciation and amortization declined from $375,453 for the three months ended
March 31, 1995 to $314,921 for the three months ended March 31, 1996 primarily
as a result of tenant improvements at 5300 Stevens Creek becoming fully
depreciated as of October 1995. General and administrative expenses increased
to $71,813 for the three months ended March 31, 1996, from $36,123 for the
three months ended March 31, 1995 largely due to 1995 cash distributions paid
in 1996 to the coventurers of 5300 Stevens Creek.
As of March 31, 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 - 98%.
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
On March 15, 1996, based upon, among other things, the advice of
Partnership counsel, Skadden, Arps, Slate, Meagher & Flom, the
General Partners adopted a resolution that states, among other
things, if a Change of Control (as defined below) occurs, the
General Partners may distribute the Partnership's cash balances
not required for its ordinary course day-today operations.
"Change of Control" means any purchase or offer to purchase
more than 10% of the Units that is not approved in advance by
the General Partners. In determining the amount of the
distribution, the General Partners may take into account all
material factors. In addition, the Partnership will not be
obligated to make any distribution to any partner and no
partner will be entitled to receive any distribution until the
General Partners have declared the distribution and established
a record date and distribution date for the distribution. The
Partnership filed a form 8-K disclosing this resolution on
March 21, 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: May 14, 1996 BY: /s/ Kenneth L. Zakin
Director and President
Date: May 14, 1996 BY: /s/ William Caulfield
Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Mar-31-1996
<CASH> 429,953
<SECURITIES> 0
<RECEIVABLES> 44,637
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 24,710,675
<DEPRECIATION> (9,685,457)
<TOTAL-ASSETS> 16,458,353
<CURRENT-LIABILITIES> 138,393
<BONDS> 4,079,298
<COMMON> 0
0
0
<OTHER-SE> 11,775,309
<TOTAL-LIABILITY-AND-EQUITY> 16,458,353
<SALES> 845,037
<TOTAL-REVENUES> 927,286
<CGS> 0
<TOTAL-COSTS> 441,410
<OTHER-EXPENSES> 386,734
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 107,417
<INCOME-PRETAX> (6,310)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,310)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,310)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
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