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, 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.
Exact Name of Registrant as Specified in its Charter
Virginia 13-3046808
--------- -----------
State or Other Jurisdiction of I.R.S. Employer Identification No.
Incorporation or Organization
3 World Financial Center, 29th Floor, 10285
New York, NY Attn: Andre Anderson
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 ____
Cosolidated Balance Sheets At September 30, At September 30,
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 (6,386,745) (6,341,461)
------------------------------------
5,524,355 5,915,678
Real estate assets held for disposition 8,335,010 8,335,010
Cash and cash equivalents 458,226 383,531
Restricted cash 19,772 187,237
Prepaid expenses, net of accumulated amortization
of $249,362 in 1997 and $279,881 in 1996 511,921 500,469
Rent and other receivables 7,868 1,877
Deferred rent receivable 422,677 435,608
Total Assets $15,279,829 $15,759,410
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable and accrued expenses $222,890 $265,809
Prepaid rent _ 15,212
Due to affiliates 2,500 9,211
Security deposits payable 68,288 68,288
Distribution payable _ 339,817
Mortgage note payable 3,953,562 4,018,893
Total Liabilities 4,247,240 4,717,230
Minority interest 15,619 20,383
Partners' Capital (Deficit):
General Partners (136,983) (134,356)
Limited Partners
(51,234 units outstanding) 11,153,953 11,156,153
Total Partners' Capital 11,016,970 11,021,797
Total Liabilities and
Partners' Capital $15,279,829 15,759,410
Consolidated Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1997
General Limited
Partners Partners Total
Balance at December 31, 1996 $(134,356) $11,156,153 $11,021,797
Net income 1,555 202,736 204,291
Distributions (4,182) (204,936) (209,118)
Balance at September 30, 1997 $(136,983) $11,153,953 $11,016,970
Consolidated Statements of Operations
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
Income
Rental $798,121 $856,346 $2,364,941 $2,552,537
Other 93,332 183,158 266,245 329,289
Interest 877 3,066 5,664 16,172
Total Income 892,330 1,042,570 2,636,850 2,897,998
Expenses
Property operating 541,871 458,451 1,530,186 1,280,167
Depreciation and
amortization 140,644 310,061 423,118 933,491
Interest 104,173 106,392 314,234 320,720
General and
administrative 51,125 36,476 169,785 142,423
Total Expenses 837,813 911,380 2,437,323 2,676,801
Income before minority
interest 54,517 131,190 199,527 221,197
Minority interest in loss of
consolidated venture 1,714 (448) 4,764 2,914
Net Income $56,231 $130,742 $204,291 $224,111
Net Income Allocated:
To the General Partners $ 428 $ 3,180 $ 1,555 $21,651
To the Limited Partners 55,803 127,562 202,736 202,460
$56,231 $130,742 $204,291 $224,111
Per limited partnership unit
(51,234 outstanding) $1.09 $2.49 $3.96 $3.95
Consolidated Statements of Cash Flows
For the nine months ended September 30, 1997 1996
Cash Flows From Operating Activities
Net income $204,291 $224,111
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 391,323 856,693
Amortization 31,795 76,798
Minority interest in loss of consolidated venture (4,764) (2,914)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Cash restricted 167,465 (24,862)
Prepaid expenses (43,246) (89,633)
Rent and other receivables (5,991) (15,823)
Deferred rent receivable 12,931 (11,224)
Accounts payable and accrued expenses (42,920) 35,120
Prepaid rent (15,212) 17,006
Due to affiliates (6,711) (5,611)
Net cash provided by operating activities 688,961 1,059,661
Cash Flows From Investing Activities
Additions to real estate _ (145,410)
Net cash (used for) investing activities _ (145,410)
Cash Flows From Financing Activities
Distributions paid to partners (548,935) (1,500,423)
Principal payments on mortgage note payable (65,331) (58,846)
Net cash used for financing activities (614,266) (1,559,269)
Net increase in cash and cash equivalents 74,695 (645,018)
Cash and cash equivalents, beginning of period 383,531 1,062,602
Cash and cash equivalents, end of period $458,226 $417,584
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $314,234 $320,720
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 September 30, 1997 and the results of operations
for the three and nine months ended September 30, 1997 and 1996,
cash flows for the nine months ended September 30, 1997 and 1996,
and the statement of partners'capital (deficit) for the nine months
ended September 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 events have occurred subsequent to
fiscal year 1996 which require 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."
Subsequent Event
On November 10, 1997, the Partnership closed on the sale of
Swenson Business Park - Building A to an unaffiliated third party
for total proceeds, before closing adjustments, of $3,010,000.
The Partnership intends to distribute the net proceeds from the
sale in the near future.
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."
On November 10, 1997, the Partnership closed on the sale of
Swenson Business Park - Building A to an unaffiliated third party
for total proceeds, before closing adjustments, of $3,010,000.
As a result of the sale, the General Partners intend to make a
special cash distribution in the near future.
The Partnership has accepted one of the offers made for Stevens
Creek Office Building and is currently negotiating the terms of a
contract of sale with the prospective purchaser of the property.
There can be no assurance that the negotiations will result in
the execution of a contract of sale. 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 $458,226
at September 30, 1997, compared with $383,531 at December 31,1996.
The increase is primarily due to net cash provided by operating
activities exceeding cash distributions and mortgage
principal payments. 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 $19,772 at September 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 and payments for real estate taxes,
partially offset by escrow fundings.
Accounts payable and accrued expenses totaled $222,890 at
September 30, 1997, compared with $265,809 at December 31, 1996.
The decrease is largely due to the timing of payment of various
invoices during 1997.
In October 1997, the General Partners executed a letter of intent
for a new five-year lease for 15,300 square feet at 959 Ridgeway
Office Building. Once the lease is executed the property will be
63% leased.
As of September 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 net income of $56,231 and
$204,291 for the three and nine months ended September 30, 1997,
respectively, compared with net income of $130,742 and $224,111
for the comparable periods in 1996. The decline in net income is
mainly due to lower rental income.
Rental income totaled $798,121 and $2,364,941 for the three and
nine months ended September 30, 1997, respectively, compared with
$856,346 and $2,552,537 for the comparable periods a year
earlier. The decreases are primarily attributable to lower
occupancy at 959 Ridgeway Office Building. Other income totaled
$93,332 and $266,245 for the three and nine months ended
September 30, 1997, respectively, compared with $183,158 and
$329,289 for the comparable periods in 1996. The decreases are
primarily due to reimbursements received in the 1996 periods for
tenant improvements completed for a tenant at 889 Ridgelake
Office Building. Interest income totaled $877 and $5,664 for the
three and nine months ended September 30, 1997, respectively,
compared with $3,066 and $16,172 for the comparable periods in
1996. The decreases are primarily attributable to lower average
cash balances maintained in 1997.
Property operating expenses totaled $541,871 and $1,530,186 for
the three and nine months ended September 30, 1997, compared with
$458,451 and $1,280,167 for the respective 1996 periods.
The increases are primarily attributable to property repairs completed
at Stevens Creek Office Building. Depreciation and amortization declined from
$310,061 and $933,491 for the three and nine months ended
September 30, 1996, respectively, to $140,644 and $423,118 for
the three and nine months ended September 30, 1997, respectively,
primarily as a result of the Swenson Business Park-Building A and
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 nine months
ended September 30, 1997 were $51,125 and $169,785, compared to
$36,476 and $142,423 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.
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, 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: November 13, 1997 BY: /s/Jeffrey C.Carter
Director and President
Date: November 13, 1997 BY: /s/Michael T. Marron
Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Sep-30-1997
<CASH> 477,998
<SECURITIES> 000
<RECEIVABLES> 7,868
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 466,094
<PP&E> 20,246,110
<DEPRECIATION> (6,386,745)
<TOTAL-ASSETS> 15,279,829
<CURRENT-LIABILITIES> 293,678
<BONDS> 3,953,562
<COMMON> 000
000
000
<OTHER-SE> 11,016,970
<TOTAL-LIABILITY-AND-EQUITY> 15,279,829
<SALES> 2,364,941
<TOTAL-REVENUES> 2,636,850
<CGS> 000
<TOTAL-COSTS> 1,530,186
<OTHER-EXPENSES> 592,903
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 314,234
<INCOME-PRETAX> 204,291
<INCOME-TAX> 000
<INCOME-CONTINUING> 204,291
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 204,291
<EPS-PRIMARY> 3.96
<EPS-DILUTED> 3.96
</TABLE>
