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, 1999
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or
Transition Report Pursuant to Section 13 or 15(d) of
- ---------- the Securities Exchange Act of 1934
For the Transition period from to
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Commission File Number: 0-10222
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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 of I.R.S. Employer Identification No.
Incorporation or Organization
3 World Financial Center, 29th Floor,
New York, NY Attn.: Andre Anderson 10285
- --------------------------------------- -----
Address of Principal Executive Offices Zip Code
(212) 526-3183
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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
---- ----
<PAGE>
2
Qualified Properties 80, L.P.
and Consolidated Ventures
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Consolidated Balance Sheets
At June 30, At December 31,
1999 1998
(unaudited) (audited)
- --------------------------------------------------------------------------------
<S> <C> <C>
Assets
Real estate assets held for disposition $ -- $5,605,771
Cash and cash equivalents 7,334,519 1,938,059
Restricted cash 82,200 77,510
Prepaid expenses 9,684 10,225
Rent and other receivables 8,716 3,523
- --------------------------------------------------------------------------------
Total Assets $7,435,119 $7,635,088
================================================================================
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable and accrued expenses $ 192,309 $ 269,259
Due to affiliates 29,579 11,946
Mortgage note payable -- 3,832,621
Total Liabilities 221,888 4,113,826
Minority interest 1,274,305 1,120,945
Partners' Capital (Deficit):
General Partners (190,043) (225,429)
Limited Partners (51,234 units outstanding) 6,128,969 2,625,746
Total Partners' Capital 5,938,926 2,400,317
- --------------------------------------------------------------------------------
Total Liabilities and Partners' Capital $7,435,119 $7,635,088
================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Consolidated Statement of Partners' Capital (Deficit)
(UNAUDITED)
For the six months ended June 30, 1999
General Limited
Partners Partners Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1998 $ (225,429) $2,625,746 $2,400,317
Net income 35,386 3,503,223 3,538,609
- --------------------------------------------------------------------------------
Balance at June 30, 1999 $ (190,043) $6,128,969 $5,938,926
================================================================================
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
3
Qualified Properties 80, L.P.
and Consolidated Ventures
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Consolidated Statements of Operations
(UNAUDITED)
Three months ended June 30, Six months ended June 30,
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income
Rental $ 446,058 $ 527,967 $ 869,129 $1,005,650
Interest 21,291 40,650 42,905 184,313
Other 2,775 13,056 5,209 34,727
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Total Income 470,124 581,673 917,243 1,224,690
- ----------------------------------------------------------------------------------------------
Expenses
Property operating 219,424 193,964 459,071 503,894
Depreciation and amortization -- 143,182 -- 285,572
Interest 179,532 102,350 279,911 205,324
General and administrative 71,827 75,339 214,370 140,643
--------------------------------------------------------
Total Expenses 470,783 514,835 953,352 1,135,433
- ----------------------------------------------------------------------------------------------
Income (loss) before minority interest
and gain on sale of real estate (659) 66,838 (36,109) 89,257
Minority interest (149,764) (3,204) (153,360) 57
--------------------------------------------------------
Income (loss) before gain on sale of
real estate (150,423) 63,634 (189,469) 89,314
Gain on sale of real estate 3,728,078 -- 3,728,078 7,829,940
- ----------------------------------------------------------------------------------------------
Net Income $3,577,655 $ 63,634 $3,538,609 $7,919,254
==============================================================================================
Net Income Allocated:
To the General Partners $ 35,777 $ 636 $ 35,386 $ 79,192
To the Limited Partners 3,541,878 62,998 3,503,223 7,840,062
- ----------------------------------------------------------------------------------------------
$3,577,655 $ 63,634 $3,538,609 $7,919,254
==============================================================================================
Per limited partnership unit
(51,234 outstanding) $ 69.13 $ 1.23 $ 68.38 $ 153.02
- ----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
4
Qualified Properties 80, L.P.
and Consolidated Ventures
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Consolidated Statements of Cash Flows
(UNAUDITED)
For the six months ended June 30,
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 3,538,609 $ 7,919,254
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization -- 285,572
Gain on sale of real estate (3,728,078) (7,829,940)
Minority interest in income (loss)
of consolidated venture 153,360 (57)
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Cash restricted (4,690) (5,379)
Prepaid expenses 541 (60,892)
Rent and other receivables (5,193) (14,662)
Deferred rent receivable -- 7,546
Accounts payable and accrued expenses (76,950) (12,521)
Due to affiliates 17,633 826
Security deposit payable -- (60,521)
---------------------------
Net cash provided by (used for) operating activities (104,768) 229,226
- --------------------------------------------------------------------------------
Cash Flows From Investing Activities
Proceeds from sale of real estate 9,359,802 15,223,030
Additions to real estate assets (25,953) --
---------------------------
Net cash provided by investing activities 9,333,849 15,223,030
- --------------------------------------------------------------------------------
Cash Flows From Financing Activities
Distributions paid to partners -- (14,310,742)
Principal payments on mortgage note payable (3,832,621) (47,719)
---------------------------
Net cash used for financing activities (3,832,621) (14,358,461)
- --------------------------------------------------------------------------------
Net increase in cash and cash equivalents 5,396,460 1,093,795
Cash and cash equivalents, beginning of period 1,938,059 1,023,370
- --------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 7,334,519 $ 2,117,165
================================================================================
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 279,911 $ 205,324
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Supplemental Disclosure of Non-Cash Investing Information
Write-off of fully depreciated tenant improvements $ -- $ 346,039
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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.
- --------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
5
Qualified Properties 80, L.P.
and Consolidated Ventures
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 1998 audited
consolidated financial statements within Form 10-K.
The unaudited consolidated financial statements include all normal and recurring
adjustments which are, in the opinion of management, necessary to present a fair
statement of financial position as of June 30, 1999 and the results of
operations for the six months ended June 30, 1999 and 1998, cash flows for the
six months ended June 30, 1999 and 1998, and the statement of partners' capital
(deficit) for the six months ended June 30, 1999. Results of operations for the
period are not necessarily indicative of the results to be expected for the full
year.
The following significant events occurred subsequent to fiscal year 1998, which
require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
On June 30, 1999, the Partnership closed on the sale of 889 Ridgelake Office
Building and 959 Ridgeway Office Building (the "Properties") to a Joint Venture
Partner, Boyle Investment Company and related parties (the "Buyers"), for
selling prices of $7,400,802 and $1,959,000, respectively, net of closing
adjustments and selling costs, which resulted in gains of $3,026,828 on the sale
of 889 Ridgelake and $701,250 on the sale of 959 Ridgeway. The selection of the
Joint Venture Partner was the result of a competitive bidding process organized
by the real estate broker engaged to assist in selling the two remaining
Properties.
As a result of these sales, the General Partners intend to distribute the net
proceeds from the sales together with the Partnership's remaining cash reserves
(after payment of or provision for the Partnership's liabilities and expenses,
and establishment of a reserve for contingencies, if any) during the third
quarter of 1999 and dissolve the Partnership in 1999.
<PAGE>
6
Qualified Properties 80, L.P.
and Consolidated Ventures
Part I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
On June 30, 1999, the Partnership closed on the sale of the 889 Ridgelake Office
Building and 959 Ridgeway Office Building (the "Properties") to a Joint Venture
Partner, Boyle Investment Company and related parties (the "Buyers"), for
selling prices of $7,400,802 and $1,959,000, respectively, net of closing
adjustments and selling costs, which resulted in gains of $3,026,828 on the sale
of 889 Ridgelake and $701,250 on the sale of 959 Ridgeway. The selection of the
Joint Venture Partner was the result of a competitive bidding process organized
by the real estate broker engaged to assist in selling the two remaining
Properties.
As a result of these sales, the General Partners intend to distribute the net
proceeds from the sales together with the Partnership's remaining cash reserves
(after payment of or provision for the Partnership's liabilities and expenses,
and establishment of a reserve for contingencies, if any) during the third
quarter of 1999 and dissolve the Partnership in 1999.
The Partnership had cash and cash equivalents totaling $7,334,519 at June 30,
1999, compared to $1,938,059 at December 31, 1998. The increase is primarily due
to the sale of the two remaining Properties on June 30, 1999.
Rent and other receivables totaled $8,716 at June 30, 1999, compared to $3,523
at December 31, 1998.
Accounts payable and accrued expenses totaled $192,309 at June 30, 1999,
compared with $269,259 at December 31, 1998. The decrease is largely due to the
lower real estate tax accruals due to the sale of the Properties.
On June 30, 1999, the mortgage note payable on 889 Ridgelake was paid from the
proceeds of the sale of the Property.
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 $7,829,940, which is reflected in the Partnership's statement of
operations for the six months ended June 30, 1998. On April 7, 1998, the
Partnership paid a special cash distribution to the 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
- ---------------------
For the three and six months ended June 30, 1999, the Partnership's operations
resulted in net income of $3,577,655 and $3,538,609 compared to net income of
$63,634 and $7,919,254 for the corresponding periods in 1998. Net income for the
1999 and 1998 six-month periods includes gains on the sale of real estate in the
amounts of $3,728,078 and $7,829,940, resulting from the sale of 959 Ridgeway
and 889 Ridgelake in 1999, and the sale of Stevens Creek in 1998. Excluding this
gain, Partnership operations resulted in a loss before minority interest and
gain on sale of real estate of $659 and $36,109 for the three and six months
ended June 30, 1999 compared with income before minority interest and gain on
sale of real estate of $66,838 and $89,257 for the corresponding periods in
1998. The change from net income before minority interest and gain on sale for
the six months ended June 30, 1998 to net loss before minority interest and gain
on sale for the six months ended June 30, 1999 is primarily due to higher
interest income and rental income in 1998. Partnership administrative expenses
also increased in 1999.
<PAGE>
7
Qualified Properties 80, L.P.
and Consolidated Ventures
Interest income totaled $21,291 and $42,905 for the three and six months ended
June 30, 1999 compared to $40,650 and $184,313 for the corresponding periods in
1998. The decrease is due to the lower cash balance in 1999 due to the special
cash distribution from the net proceeds from the sale of Stevens Creek Office
Building in 1998.
The decrease in property operating expenses is due to the fact that there were
two office buildings for the six months ended June 30, 1999, compared to three
office buildings for the corresponding period in 1998.
General and administrative expenses totaled $71,827 and $214,370 for the three
and six months ended June 30, 1999, respectively, compared with $75,339 and
$140,643 for the corresponding periods in 1998. The increase is due to the
marketing expenses associated with the sale of the two remaining Properties.
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 July 13, 1999 the Partnership filed a form 8-K reporting that
on June 30, 1999 the Partnership executed a sale of 889
Ridgelake and 959 Ridgeway Office Buildings.
<PAGE>
8
Qualified Properties 80, L.P.
and Consolidated Ventures
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, 1999 BY: /s/Michael T. Marron
-------------------------------------
Name: Michael T. Marron
Title: President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Jun-30-1999
<CASH> 7,416,719
<SECURITIES> 000
<RECEIVABLES> 8,716
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 7,435,119
<PP&E> 000
<DEPRECIATION> 000
<TOTAL-ASSETS> 7,435,119
<CURRENT-LIABILITIES> 221,888
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 5,938,926
<TOTAL-LIABILITY-AND-EQUITY> 7,435,119
<SALES> 869,129
<TOTAL-REVENUES> 917,243
<CGS> 000
<TOTAL-COSTS> 459,071
<OTHER-EXPENSES> 214,370
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 279,911
<INCOME-PRETAX> (189,469)
<INCOME-TAX> 000
<INCOME-CONTINUING> (189,469)
<DISCONTINUED> 000
<EXTRAORDINARY> 3,728,078
<CHANGES> 000
<NET-INCOME> 3,538,609
<EPS-BASIC> 68.38
<EPS-DILUTED> 68.38
</TABLE>
