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, 1998
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
Incorporation or Organization Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3183
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 June 30, At December 31,
1998 1997
Assets
Real estate at cost:
Land $ _ $ 1,348,365
Buildings and improvements _ 10,562,735
_ 11,911,100
Less accumulated depreciation _ (6,516,375)
_ 5,394,725
Real estate assets held for disposition 5,422,973 7,359,706
Cash and cash equivalents 2,117,165 1,023,370
Restricted cash 55,946 50,567
Prepaid expenses, net of
accumulated amortization
of $132,997 in 1997 22,496 205,922
Rent and other receivables 15,101 439
Deferred rent receivable _ 113,664
Total Assets $7,633,681 $ 14,148,393
Liabilities and Partners' Capital(Deficit)
Liabilities:
Accounts payable and accrued expenses $ 204,320 $ 220,073
Due to affiliates 5,748 4,922
Security deposits payable _ 60,521
Mortgage note payable 3,882,902 3,930,621
Total Liabilities 4,092,970 4,216,137
Minority interest 13,808 13,865
Partners' Capital (Deficit):
General Partners (992,468) (156,069)
Limited Partners
(51,234 units outstanding) 4,519,371 10,074,460
Total Partners' Capital 3,526,903 9,918,391
Total Liabilities and
Partners' Capital $7,633,681 $ 14,148,393
Consolidated Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1998 General Limited
Partners Partners Total
Balance at December 31, 1997 $(156,069) $10,074,460 $9,918,391
Net income 79,192 7,840,062 7,919,254
Distributions (915,591) (13,395,151)(14,310,742)
Balance at June 30, 1998 $(992,468) $ 4,519,371 $3,526,903
Consolidated Statements of Operations
Three months ended June 30, Six months ended June 30,
1998 1997 1998 1997
Income
Rental $ 527,967 $807,463 $1,005,650 $1,566,820
Other 13,056 87,830 34,727 172,913
Interest 40,650 2,093 184,313 4,787
Total Income 581,673 897,386 1,224,690 1,744,520
Expenses
Property operating 193,964 608,413 503,894 988,315
Depreciation and amortization 143,182 140,021 285,572 282,474
Interest 102,350 104,750 205,324 210,061
General and administrative 75,339 59,954 140,643 118,660
Total Expenses 514,835 913,138 1,135,433 1,599,510
Income (loss) before minority
interest and gain on sale of
real estate 66,838 (15,752) 89,257 145,010
Minority interest (3,204) 1,581 57 3,050
Income before Gain on sale of
real estate 63,634 (14,171) 89,314 148,060
Gain on sale of real estate _ _ 7,829,940 _
Net Income (Loss) $ 63,634 $(14,171) $7,919,254 $ 148,060
Net Income (Loss) Allocated:
To the General Partners $ 636 $ (1,012) $79,192 $ 1,127
To the Limited Partners 62,998 (13,159) 7,840,062 146,933
$ 63,634 $(14,171) $7,919,254 $ 148,060
Per limited partnership unit
(51,234 outstanding) $ 1.23 $ (.26) $ 153.02 $ 2.87
Consolidated Statements of Cash Flows
For the six months ended June 30, 1998 1997
Cash Flows From Operating Activities
Net income $7,919,254 $148,060
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 285,572 282,474
Gain on sale of real estate (7,829,940) _
Minority interest in loss of
consolidated venture (57) (3,050)
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Cash restricted (5,379) 139,117
Prepaid expenses (60,892) 23,015
Rent and other receivables (14,662) (6,153)
Deferred rent receivable 7,546 2,688
Accounts payable and accrued expenses (12,521) (113,344)
Prepaid rent _ (15,212)
Due to affiliates 826 (4,018)
Security deposit payable (60,521) _
Net cash provided by operating activities 229,226 453,577
Cash Flows From Investing Activities
Proceeds from sale of real estate 15,223,030 _
Net cash provided by investing activities
15,223,030 _
Cash Flows From Financing Activities
Distributions paid to partners (14,310,742) (548,935)
Principal payments on mortgage note payable (47,719) (42,982)
Net cash used for financing activities (14,358,461) (591,917)
Net increase (decrease) in cash
and cash equivalents 1,093,795 (138,340)
Cash and cash equivalents, beginning of period 1,023,370 383,531
Cash and cash equivalents, end of period $2,117,165 $245,191
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 205,324 $210,061
Supplemental Disclosure of Non-Cash Investing Activities
Write-off of fully depreciated
tenant improvements $ _ $346,039
Supplemental Disclosure of Cash Flow Information:
Prepaid rent - net of $3,232 included in accounts payable was classified to net
proceeds from sale of property.
Supplemental Disclosure of Non-Cash Operating Activities:
In connection with the General Partners' intent to sell the properties, real
estate held for investment, deferred rent receivable and prepaid leasing
commissions in the amounts of $5,135,464, $106,118, and $181,391, respectively,
were reclassified to "Real estate assets held for disposition" in June of 1998.
Notes to the Consolidated Financial Statements
The unaudited consolidated financial statements should be read in conjunction
with Qualified Properties 80, L.P.'s (the "Partnership") annual 1997 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, 1998 and the
results of operations for the three and six months ended June 30, 1998 and
1997, cash flows for the six months ended June 30, 1998 and 1997, and
the statement of partners' capital (deficit) for the six months ended June
30, 1998. 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 occurred subsequent to fiscal year 1997, which
require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
On February 2, 1998, the Partnership closed on the sale of Stevens Creek Office
Building (the "Property"). The Property was sold for net proceeds of
$15,223,030 to an entity controlled by Invesco Realty Advisors, Inc. (the
"Buyer"), a Delaware Corporation unaffiliated with the Partnership. The
selling price was determined by arm's length negotiations between the
Partnership and the Buyer. The transaction resulted in a gain on sale of
approximately $7.8 million, which is reflected in the Partnership's statement
of operations for the six months ended June 30, 1998.
The Partnership's remaining real estate assets, deferred rent receivable and
prepaid leasing costs were reclassified on the consolidated balance sheets at
June 30, 1998 to "Real estate assets held for disposition." Accordingly, the
Partnership has suspended depreciation and amortization in accordance with the
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
Part I, Item 2.Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
On February 2, 1998 the sale of Stevens Creek Office Building was completed.
The property was sold for net proceeds of $15,223,030 and resulted in a gain on
sale of approximately $7.8 million, which is reflected in the Partnership's
statement of operations for the six months ended June 30, 1998.
The Partnership has engaged real estate brokers to assist in selling the
Partnership's two remaining properties, 889 Ridgelake Office Building and 959
Ridgeway Office Building. While it is currently anticipated that the
properties will be sold and the Partnership liquidated in 1998, there can be no
assurance that either property will be sold within this time frame, or that the
sales will result in a particular price. In view of the anticipated sale of
the properties in 1998, the Partnership's real estate has been recorded on the
Partnership's June 30, 1998 balance sheet as "Real estate assets held for
disposition."
The Partnership had cash and cash equivalents totaling $2,117,165 at June 30,
1998, compared to $1,023,370 at December 31, 1997. The increase is primarily
due to the receipt of net proceeds from the sale of Stevens Creek Office
Building, which, together with net cash flow from operating activities,
exceeded cash distributions and mortgage principal payments for the six months
ended June 30, 1998.
Rent and other receivables totaled $15,101 at June 30, 1998, compared to $439
at December 31, 1997. The increase primarily represents rent and escalation
income due from tenants at 889 Ridgelake Office Building. Security deposits
payable decreased from $60,521 at December 31, 1997 to $0 at June 30, 1998, as
a result of the sale of Stevens Creek Office Building.
Prepaid expenses totaled $22,496 at June 30, 1998, compared to $205,922 at
December 31, 1997. The decrease was primarily due to the sale of Stevens Creek
Office Building and the reclassification of the Partnerships real estate to
"Real estate assets held for disposition" as of June 30, 1998.
On April 7, 1998, the Partnership paid a special cash distribution to Limited
Partners from the net proceeds from the sale of Stevens Creek Office Building
in the amount of $261.45 per Unit to Unitholders of record as of April 1, 1998.
Results of Operations
The Partnership's operations resulted in net income of $63,634 and $7,919,254
for the three and six months ended June 30, 1998, compared with a net loss of
$14,171 for the three months ended June 30, 1997, and net income of $148,060
for the six months ended June 30, 1997. Net income for the 1998 six-month
period includes a gain on sale of real estate in the amount of $7,829,940,
resulting from the sale of Stevens Creek Office Building. Excluding this gain,
Partnership operations resulted in income before gain on sale of real estate of
$89,314 for the six months ended June 30, 1998 compared with $148,060 for the
corresponding period in 1997. The decrease is mainly due to a reduction in
rental and other income and a decrease in total expenses, partially offset by
an increase in interest income due to the sale of Swenson Business Park -
Building A in November 1997 and Stevens Creek Office Building in February 1998.
The change from net loss to net income for the three-month period is primarily
attributable to decreases in property operating expenses, which more than
offset reductions in rental and other income resulting from the sale of Swenson
Business Park - Building A and Stevens Creek Office Building.
Primarily as a result of the sale of Swenson Business Park - Building A in
November 1997 and Stevens Creek Office Building in February 1998, the following
income and expense categories decreased in comparison to 1997: rental income,
other income and property operating expenses. Interest income totaled $40,650
and $184,313 for the three and six months ended June 30, 1998, compared to
$2,093 and $4,787 for the corresponding periods in 1997, reflecting the
Partnership's higher cash balances in 1998 as a result of the sale of Swenson
Business Park - Building A in November 1997 and Stevens Creek Office Building
in February 1998. General and administrative expenses totaled $75,339 and
$140,643 for the three and six months ended June 30, 1998, respectively,
compared with $59,954 and $118,660 for the corresponding periods in 1997. The
increase is primarily attributable to higher legal expenses associated with the
sale of Stevens Creek Office Building.
As of June 30, 1998, lease levels at each of the Properties were as follows:
959 Ridgeway Office Building - 63%; 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 - No reports on Form 8-K were filed
during the quarter ended June 30, 1998.
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, 1998 BY: /s/ Michael T. Marron
Michael T. Marron
President and
Chief Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Jun-30-1998
<CASH> 2,173,111
<SECURITIES> 000
<RECEIVABLES> 15,101
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 2,210,708
<PP&E> 5,422,973
<DEPRECIATION> 000
<TOTAL-ASSETS> 7,633,681
<CURRENT-LIABILITIES> 210,068
<BONDS> 3,882,902
<COMMON> 000
000
000
<OTHER-SE> 3,526,903
<TOTAL-LIABILITY-AND-EQUITY> 7,633,681
<SALES> 1,005,650
<TOTAL-REVENUES> 1,224,690
<CGS> 000
<TOTAL-COSTS> 503,894
<OTHER-EXPENSES> 426,215
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 205,324
<INCOME-PRETAX> 89,314
<INCOME-TAX> 000
<INCOME-CONTINUING> 89,314
<DISCONTINUED> 000
<EXTRAORDINARY> 7,829,940
<CHANGES> 000
<NET-INCOME> 7,919,254
<EPS-PRIMARY> 153.02
<EPS-DILUTED> 153.02
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