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, 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.
-----------------------------
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
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<PAGE>
2
QUALIFIED PROPERTIES 80, L.P.
AND CONSOLIDATED VENTURES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
At March 31, At December 31,
1999 1998
(unaudited) (audited)
- --------------------------------------------------------------------------------
<S> <C> <C>
Assets
Real estate assets held for disposition $ 5,630,073 $ 5,605,771
Cash and cash equivalents 1,840,067 1,938,059
Restricted cash 41,100 77,510
Prepaid expenses 4,030 10,225
Rent and other receivables 3,590 3,523
- --------------------------------------------------------------------------------
Total Assets $ 7,518,860 $ 7,635,088
================================================================================
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable and accrued expenses $ 206,867 $ 269,259
Due to affiliates 19,703 11,946
Mortgage note payable 3,806,478 3,832,621
---------------------------
Total Liabilities 4,033,048 4,113,826
---------------------------
Minority interest 1,124,541 1,120,945
Partners' Capital (Deficit):
General Partners (225,819) (225,429)
Limited Partners (51,234 units outstanding) 2,587,090 2,625,746
---------------------------
Total Partners' Capital 2,361,271 2,400,317
- --------------------------------------------------------------------------------
Total Liabilities and Partners' Capital $ 7,518,860 $ 7,635,088
================================================================================
</TABLE>
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(UNAUDITED)
For the three months ended March 31, 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 (390) (38,656) (39,046)
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Balance at March 31, 1999 $ (225,819) $ 2,587,090 $ 2,361,271
================================================================================
</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 March 31,
1999 1998
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<S> <C> <C>
Income
Rental $ 423,071 $ 477,683
Interest 21,614 143,663
Other 2,434 21,671
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Total Income 447,119 643,017
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Expenses
Property operating 239,647 309,930
Depreciation and amortization -- 142,390
Interest 100,379 102,974
General and administrative 142,543 65,304
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Total Expenses 482,569 620,598
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Income (loss) before minority interest
and gain on sale of real estate (35,450) 22,419
Minority interest (3,596) 3,261
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Loss before gain on sale of real estate (39,046) 25,680
Gain on sale of real estate -- 7,829,940
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Net Income (Loss) $ (39,046) $ 7,855,620
================================================================================
Net Income (Loss) Allocated:
To the General Partners $ (390) $ 78,556
To the Limited Partners (38,656) 7,777,064
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$ (39,046) $ 7,855,620
================================================================================
Per limited partnership unit
(51,234 outstanding) $ (.75) $ 151.79
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</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 three months ended March 31,
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ (39,046) $ 7,855,620
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation and amortization -- 142,390
Gain on sale of real estate -- (7,829,940)
Minority interest in loss of consolidated venture 3,596 (3,261)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Cash restricted 36,410 26,001
Prepaid expenses 6,195 --
Rent and other receivables (67) (22,606)
Deferred rent receivable -- 8,927
Accounts payable and accrued expenses (62,392) 97,317
Due to affiliates 7,757 78
Security deposit payable -- (60,521)
---------------------------
Net cash provided by (used for) operating activities (47,547) 214,005
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Cash Flows From Investing Activities
Proceeds from sale of real estate -- 15,223,030
Additions to real estate assets (24,302) --
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Net cash provided by (used for) investing activities (24,302) 15,223,030
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Cash Flows From Financing Activities
Principal payments on mortgage note payable (26,143) (23,548)
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Net cash used for financing activities (26,143) (23,548)
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Net increase (decrease) in cash and cash equivalents (97,992) 15,413,487
Cash and cash equivalents, beginning of period 1,938,059 1,023,370
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Cash and cash equivalents, end of period $ 1,840,067 $16,436,857
================================================================================
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 100,379 $ 102,974
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</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 March 31, 1999 and the results of
operations for the three months ended March 31, 1999 and 1998, cash flows for
the three months ended March 31, 1999 and 1998, and the statement of partners'
capital (deficit) for the three months ended March 31, 1999. Results of
operations for the period are not necessarily indicative of the results to be
expected for the full year.
No significant events occurred subsequent to fiscal year 1998, and no material
contingencies exist which require disclosure in this interim report per
Regulation S-X, Rule 10-01, Paragraph (a)(5).
<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
- -------------------------------
The Partnership has engaged a real estate broker to assist in selling the
Partnership's two remaining properties, 889 Ridgelake and 959 Ridgeway.
Accordingly, the Partnership's real estate assets, deferred rent receivable and
prepaid leasing costs were reclassified on the consolidated balance sheets at
December 31, 1998 to "Real estate assets held for disposition," and the
Partnership suspended depreciation and amortization in accordance with Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The Partnership
executed a purchase and sale agreement with the Joint Venture partner to
purchase both Properties. The selection of the potential offer by 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. It
is currently anticipated that the properties will be sold and the Partnership
liquidated in 1999, however, 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.
The Partnership had cash and cash equivalents totaling $1,840,067 at March 31,
1999, compared to $1,938,059 at December 31, 1998. The decrease is primarily due
to the cash used for operations, additions to real estate assets and mortgage
principal payments during the three month period ended March 31, 1999.
Rent and other receivables totaled $3,590 at March 31, 1999, compared to $3,523
at December 31, 1998.
Accounts payable and accrued expenses totaled $206,867 at March 31, 1999,
compared with $269,259 at December 31, 1998. The decrease is largely due to the
timing of payment of invoices for Partnership administrative services.
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 three months ended March 31, 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 months ended March 31, 1999, the Partnership's operations resulted
in net loss of $39,046, compared to net income of $7,855,620 for the
corresponding period in 1998. Net income for the 1998 three-month period
includes a gain on sale of real estate in the amount of $7,829,940, resulting
from the sale of Stevens Creek. Excluding this gain, Partnership operations
resulted in a loss before minority interest and gain on sale of real estate of
$35,450 for the three months ended March 31, 1999 compared with income before
minority interest and gain on sale of real estate of $22,419 for the
corresponding period in 1998. The change from net income before minority
interest and gain on sale in 1998 to net loss before minority interest and gain
on sale in 1999 is primarily due to higher interest income in 1998, offset by
lower depreciation, and higher property operating and administrative expenses in
1999.
Interest income totaled $21,614 for the first three months in 1999 compared to
$143,663 for the corresponding period 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.
<PAGE>
7
QUALIFIED PROPERTIES 80, L.P.
AND CONSOLIDATED VENTURES
The decrease in property operation expenses is due to the fact that there were
two office buildings for the three months ended March 31, 1999, compared to
three office buildings for the corresponding period in 1998.
General and administrative expenses totaled $142,543 and $65,304 for the first
quarter of 1999 and 1998, respectively. The increase is due to the higher
professional fees related to the marketing of the two remaining properties, 889
Ridgelake and 959 Ridgeway Office Buildings.
As of March 31, 1999, lease levels at each of the Properties were as follows:
959 Ridgeway Office Building - 90%; and 889 Ridgelake Office Building - 94%.
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 March 31, 1999.
<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: May 17, 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> 3-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Mar-31-1999
<CASH> 1,881,167
<SECURITIES> 000
<RECEIVABLES> 3,590
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 1,888,787
<PP&E> 12,405,709
<DEPRECIATION> (6,775,636)
<TOTAL-ASSETS> 7,518,860
<CURRENT-LIABILITIES> 226,570
<BONDS> 3,806,478
000
000
<COMMON> 000
<OTHER-SE> 2,361,271
<TOTAL-LIABILITY-AND-EQUITY> 7,518,860
<SALES> 423,071
<TOTAL-REVENUES> 447,119
<CGS> 000
<TOTAL-COSTS> 239,647
<OTHER-EXPENSES> 142,543
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 100,379
<INCOME-PRETAX> (39,046)
<INCOME-TAX> 000
<INCOME-CONTINUING> (39,046)
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (39,046)
<EPS-PRIMARY> (.75)
<EPS-DILUTED> (.75)
</TABLE>
