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 June 30, 1997
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.
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Exact Name of Registrant as Specified in its Charter
Virginia 13-3046808
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State or Other Jurisdiction I.R.S. Employer Identification No.
of Incorporation or Organization
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285
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Address of Principal Executive Offices Zip Code
(212) 526-3237
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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
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Consolidated Balance Sheets At June 30, At December 31,
1997 1996
Assets
Real estate at cost:
Land $ 1,348,365 $ 1,348,365
Buildings and improvements 10,562,735 10,908,774
11,911,100 12,257,139
Less accumulated depreciation (6,257,116) (6,341,461)
5,653,984 5,915,678
Real estate assets held for disposition 8,335,010 8,335,010
Cash and cash equivalents 245,191 383,531
Restricted cash 48,120 187,237
Prepaid expenses, net of
accumulated amortization
of $238,348 in 1997 and 1996 456,674 500,469
Rent and other receivables 8,030 1,877
Deferred rent receivable 432,920 435,608
Total Assets $15,179,929 $15,759,410
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable and accrued expenses $ 152,465 $ 265,809
Prepaid rent -- 15,212
Due to affiliates 5,193 9,211
Security deposits payable 68,288 68,288
Distribution payable -- 339,817
Mortgage note payable 3,975,911 4,018,893
Total Liabilities 4,201,857 4,717,230
Minority interest 17,333 20,383
Partners' Capital (Deficit):
General Partners (137,411) (134,356)
Limited Partners (51,234 units outstanding) 11,098,150 11,156,153
Total Partners' Capital 10,960,739 11,021,797
Total Liabilities and Partners' Capital $15,179,929 $15,759,410
Consolidated Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1997 General Limited
Partners Partners Total
Balance at December 31, 1996 $(134,356) $11,156,153 $11,021,797
Net income 1,127 146,933 148,060
Distributions (4,182) (204,936) (209,118)
Balance at June 30, 1997 $(137,411) $11,098,150 $10,960,739
Consolidated Statements of Operations
Three months Six months
ended June 30, ended June 30,
1997 1996 1997 1996
Income
Rental $807,463 $851,154 $1,566,820 $1,696,191
Other 87,830 74,114 172,913 146,131
Interest 2,093 2,874 4,787 13,106
Total Income 897,386 928,142 1,744,520 1,855,428
Expenses
Property operating 608,413 380,306 988,315 821,716
Depreciation and amortization 140,021 308,509 282,474 623,430
Interest 104,750 106,911 210,061 214,328
General and administrative 59,954 34,134 118,660 105,947
Total Expenses 913,138 829,860 1,599,510 1,765,421
Income before minority interest (15,752) 98,282 145,010 90,007
Minority interest in loss of
consolidated venture 1,581 1,397 3,050 3,362
Net Income (Loss) $(14,171) $99,679 $148,060 $93,369
Net Income (Loss) Allocated:
To the General Partners $ (1,012) $18,597 $ 1,127 $18,471
To the Limited Partners (13,159) 81,082 146,933 74,898
$(14,171) $99,679 $148,060 $93,369
Per limited partnership unit
(51,234 outstanding) $(.26) $1.58 $2.87 $1.46
Consolidated Statements of Cash Flows
For the six months ended June 30, 1997 1996
Cash Flows From Operating Activities
Net income $148,060 $ 93,369
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 282,474 623,430
Minority interest in loss of consolidated venture (3,050) (3,362)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Cash restricted 139,117 (37,494)
Prepaid expenses 23,015 (75,230)
Rent and other receivables (6,153) (6,694)
Deferred rent receivable 2,688 (12,569)
Accounts payable and accrued expenses (113,344) (28,579)
Prepaid rent (15,212) 16,929
Due to affiliates (4,018) (2,393)
Net cash provided by operating activities 453,577 567,407
Cash Flows From Investing Activities
Additions to real estate -- (86,441)
Net cash (used for) investing activities -- (86,441)
Cash Flows From Financing Activities
Distributions paid to partners (548,935) (1,160,606)
Principal payments on mortgage note payable (42,982) (38,716)
Net cash used for financing activities (591,917) (1,199,322)
Net decrease in cash and cash equivalents (138,340) (718,356)
Cash and cash equivalents, beginning of period 383,531 1,062,602
Cash and cash equivalents, end of period $245,191 $344,246
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $210,061 $214,328
Supplemental Disclosure of Non-Cash Investing Activities
Write-off of fully depreciated tenant improvements $346,039 $789,514
Notes to the Consolidated Financial Statements
The unaudited consolidated financial statements should be read in conjunction
with the Partnership's annual 1996 audited consolidated financial statements
within Form 10-K.
The unaudited consolidated financial statements include all normal and
reoccurring adjustments which are, in the opinion of management, necessary to
present a fair statement of financial position as of June 30, 1997 and
the results of operations for the three and six months ended June 30, 1997
and 1996, cash flows for the six months ended June 30, 1997 and 1996, and
the statement of partners' capital (deficit) for the six months ended June 30,
1997. Results of operations for the period are not necessarily indicative
of the results to be expected for the full year.
Certain prior year amounts have been reclassified to conform to the current
year's presentation.
The following significant event has occurred subsequent to fiscal year 1996
which requires disclosure in this interim report per Regulation S-X, Rule
10-01, Paragraph (a)(5):
The General Partners have engaged real estate brokers to assist with the sale
of Swenson Business Park - Building A and Stevens Creek Office Building.
Accordingly, such properties have been reclassified on the Consolidated Balance
Sheets as "Real estate assets held for disposition." The General Partners
anticipate that the sale of these two properties will be completed in 1997.
However, there can be no assurance that the properties will be sold within this
time frame or that any sale, if completed, will result in a particular price.
Part I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
The Partnership has engaged real estate brokers to assist with the sale of
Swenson Business Park - Building A and Stevens Creek Office Building.
Accordingly, such properties have been reclassified on the Consolidated Balance
Sheet as "Real estate assets held for disposition." The Partnership executed a
letter of intent to sell Swenson Business Park - Building A to a prospective
purchaser and is currently negotiating a formal purchase and sale agreement. In
addition, the Partnership has received several purchase offers for Stevens
Creek Office Building which are currently being evaluated. The General
Partners currently anticipate that both properties will be sold in 1997.
However, there can be no assurance that the properties will be sold within this
time frame, or that any sale, if completed, will result in a particular price.
In light of the improving real estate market conditions, the General Partners
have decided to market for sale 889 Ridgelake Office Building and 959 Ridgeway
Office Building, and intend to retain the services of a real estate broker to
assist with their marketing efforts.
The Partnership had cash and cash equivalents totaling $245,191 at June 30,
1997, compared with $383,531 at December 31, 1996. The decrease is primarily
due to cash distributions, mortgage principal payments and capital expenditures
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 $48,120 at
June 30, 1997, compared with $187,237 at December 31, 1996. The decrease is
largely due to a refund of $139,031 of excess cash which had been held in
escrow for real estate taxes.
Accounts payable and accrued expenses totaled $152,465 at June 30, 1997,
compared with $265,809 at December 31, 1996. The decrease is largely due to
differences in the timing of invoice payments for the respective periods.
In order to fund several major capital improvement projects and maintain
adequate cash reserves, cash distributions were suspended beginning with the
second quarter distribution which would have been paid in August. This
suspension should enable the Partnership to complete necessary capital
improvements at the properties, and allow for sufficient cash reserves to fund
leasing efforts at 959 Ridgeway Office Building. The General Partners will
review the Partnership's operations and cash reserves on a quarterly basis to
determine the timing and amount of future cash distributions.
As of June 30, 1997, lease levels at each of the Properties were as follows:
Swenson Business Park -Building A - 100%; Stevens Creek Office Building - 92%;
959 Ridgeway Office Building - 11%; and 889 Ridgelake Office Building - 100%.
Results of Operations
Partnership operations resulted in a net loss of $14,171 and net income of
$148,060 for the three and six months ended June 30, 1997, respectively,
compared with net income of $99,679 and $93,369 for the comparable periods in
1996. The change from net income to net loss for the three-month period is
mainly due to higher property operating expenses and lower rental income. The
higher net income for the six-month period is primarily attributable to lower
depreciation and amortization expenses.
Rental income totaled $807,463 and $1,566,820 for the three and six months
ended June 30, 1997, respectively, compared with $851,154 and $1,696,191 for
the comparable periods a year earlier. The decreases are primarily
attributable to lower occupancy at 959 Ridgeway Office Building. Other income
totaled $87,830 and $172,913 for the three and six months ended June 30, 1997,
respectively, compared with $74,114 and $146,131 for the comparable periods in
1996. The increases are primarily due to reimbursements received from a tenant
at 889 Ridgelake Office Building.
Property operating expenses totaled $608,413 and $988,315 for the three and
six months ended June 30, 1997 compared with $380,306 and $821,716 for the
respective 1996 periods. The increases are primarily attributable to property
repairs completed at Stevens Creek Office Building. Depreciation and
amortization declined from $308,509 and $623,430 for the three and six months
ended June 30, 1996, respectively, to $140,021 and $282,474 for the three and
six months ended June 30, 1997, respectively, primarily as a result of the
Swenson Business Park-Building A and 5300 Stevens Creek Office Building being
reclassified as "Real estate assets held for disposition." In addition,
certain tenant improvements at 959 Ridgeway Office Building and 889 Ridgelake
Office Building became fully depreciated by the end of 1996.
General and administrative expenses for the three and six months ended June 30,
1997 were $59,954 and $118,660, compared to $34,134 and $105,947 for the
respective periods in 1996. The increases for both periods are primarily
attributable to certain expenses incurred by an unaffiliated third party
service provider in servicing the Partnership, which were voluntarily absorbed
by affiliates of QP80 Real Estate Services Inc. in prior periods. The increase
for the six-month period was largely offset by the payment in the first quarter
of 1996 of 1995 distributions to the coventurers of Stevens Creek Boulevard
Joint Venture.
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 June 30, 1997.
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: August 13, 1997 BY: /s/Mark J. Marcucci
Director and President
Date: August 13, 1997 BY: /s/William Caulfield
Vice President and
Chief Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Jun-30-1997
<CASH> 293,311
<SECURITIES> 000
<RECEIVABLES> 8,030
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 20,246,110
<DEPRECIATION> (6,257,116)
<TOTAL-ASSETS> 15,179,929
<CURRENT-LIABILITIES> 225,946
<BONDS> 3,975,911
<COMMON> 000
000
000
<OTHER-SE> 10,960,739
<TOTAL-LIABILITY-AND-EQUITY> 15,179,929
<SALES> 1,566,820
<TOTAL-REVENUES> 1,744,520
<CGS> 000
<TOTAL-COSTS> 988,315
<OTHER-EXPENSES> 401,134
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 210,061
<INCOME-PRETAX> 148,060
<INCOME-TAX> 000
<INCOME-CONTINUING> 148,060
<DISCONTINUED> 000
<EXTRAORDINARY> 000
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<NET-INCOME> 148,060
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