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, 1996
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: 0-10223
HUTTON/CONAM REALTY INVESTORS 81
Exact Name of Registrant as Specified in its Charter
California 13-3069026
State or Other Jurisdiction of
Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285
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 ____
Consolidated Balance Sheets At March 31, At December 31,
1996 1995
Assets
Investments in real estate:
Land $3,944,195 $3,944,195
Buildings and improvements 21,299,382 21,299,382
25,243,577 25,243,577
Less accumulated depreciation (11,583,29) (11,370,295)
13,660,288 13,873,282
Cash and cash equivalents 1,403,589 1,499,119
Restricted cash 489,908 394,147
Mortgage fees, net of accumulated amortization
of $224,856 in 1996 and $209,153 in 1995 214,816 230,519
Other assets 15,591 24,946
Total Assets $15,784,192 $16,022,013
Liabilities and Partners' Capital
Liabilities:
Mortgages payable $11,924,122 $11,954,188
Distribution payable 173,978 173,978
Accounts payable and accrued expenses 229,890 210,876
Security deposits 82,867 77,433
Due to general partners and affiliates 29,058 30,138
Total Liabilities 12,439,915 12,446,613
Partners' Capital (Deficit):
General Partners (206,182) (188,213)
Limited Partners 3,550,459 3,763,613
Total Partners' Capital 3,344,277 3,575,400
Total Liabilities and Partners' Capital $15,784,192 $16,022,013
Consolidated Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1996
Limited General
Partners Partners Total
Balance at January 1, 1996 $3,763,613 $(188,213) $3,575,400
Net loss (56,574) (571) (57,145)
Distributions (156,580) (17,398) (173,978)
Balance at March 31, 1996 $3,550,459 $(206,182) $3,344,277
Consolidated Statements of Operations
For the three months ended March 31, 1996 1995
Income
Rental $921,105 $1,228,790
Interest 15,880 23,807
Total Income 936,985 1,252,597
Expenses
Property operating 466,170 590,414
Interest 252,623 330,067
Depreciation and amortization 228,697 306,549
General and administrative 46,640 38,772
Total Expenses 994,130 1,265,802
Net Loss $(57,145) $(13,205)
Net Loss Allocated:
To the General Partners $ (571) $ (132)
To the Limited Partners (56,574) (13,073)
(57,145) $(13,205)
Per limited partnership unit
(78,290 outstanding) $(.72) $(.17)
Consolidated Statements of Cash Flows
For the three months ended March 31, 1996 1995
Cash Flows From Operating Activities:
Net loss $(57,145) $(13,205)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 228,697 306,549
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Fundings to restricted cash (95,761) (161,509)
Release of restricted cash to property operations ------ 149,419
Other assets 9,355 15,397
Accounts payable and accrued expenses 19,014 76,226
Security deposits 5,434 (7,228)
Due to general partners and affiliates (1,080) (12,218)
Net cash provided by operating activities 108,514 353,431
Cash Flows From Financing Activities:
Distributions (173,978) (173,978)
Mortgage principal payments (30,066) (35,664)
Net cash used for financing activities (204,044) (209,642)
Net increase (decrease) in cash and cash equivalents (95,530) 143,789
Cash and cash equivalents, beginning of period 1,499,119 1,535,391
Cash and cash equivalents, end of period $1,403,589 $1,679,180
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $252,623 $330,067
Notes to the Consolidated Financial Statements
The unaudited consolidated financial statements should be read in
conjunction with the Partnership's annual 1995 audited
consolidated financial statements within Form 10-K.
The unaudited consolidated financial statements include all
adjustments which are, in the opinion of management, necessary to
present a fair statement of financial position as of March 31,
1996 and the results of operations and cash flows for the three
months ended March 31, 1996 and 1995 and the statement of
partner's capital (deficit) for the three months ended March 31,
1996. Results of operations for the period are not necessarily
indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year
1995, and no material contingencies exist which require
disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
Part I, Item 2 . Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
At March 31, 1996, the Partnership had cash and cash equivalents
of $1,403,589, which were invested in unaffiliated money market
funds, relatively unchanged from the balance at December 31,
1995. The Partnership also maintains a restricted cash balance,
which totaled $489,908 at March 31, 1996, representing escrows
for insurance, real estate taxes, and property replacements and
repairs, required under the terms of the current mortgage loans.
Pursuant to the terms of the loans, as costs are incurred for
property improvements or when real estate taxes and insurance are
due, reimbursements are made from the escrow accounts maintained
by the lender to the Partnership. The increase in restricted
cash is attributable to payments made to the escrow accounts for
real estate taxes and property improvements. The Partnership
expects sufficient cash to be generated from operations to meet
its current operating expenses and debt service requirements.
During 1996, the General Partners are implementing an improvement
program to upgrade the properties. This program, which includes
landscaping work at Tierra Catalina and roof repairs at Las
Colinas plus improvements to the units' interiors at both, is
intended to protect the properties' positions within their
respective markets, which are growing increasingly competitive
with the addition of new apartment properties and position the
properties for increases in revenue and market value. These
improvements will be funded from the Partnership's cash reserves.
The General Partners declared a cash distribution of $2.00 per
Unit, a portion of which will be funded from the Partnership cash
reserves, for the quarter ended March 31, 1996 which will be paid
to investors on or about May 15, 1996. The level of future
distributions will be evaluated on a quarterly basis and will
depend on the Partnership's operating results and future cash
needs. It is anticipated that cash from reserves may be required
to fund a portion of the distributions during the remainder of
1996 as a result of the property improvements required.
Given favorable market conditions, particularly in the Tulsa,
Oklahoma area, the General Partners have engaged a commercial
real estate broker to market Ridge Park for sale. There can be
no assurances that a sale will be completed or that any
particular price for the property can be obtained.
Results of Operations
Partnership operations for the three months ended March 31, 1996,
resulted in a net loss of $57,145 compared with a net loss of
$13,205 in the first quarter of 1995. The increase in net loss
is due primarily to a reduction in rental income more than
offsetting reductions in property operating expense, depreciation
and amortization, and interest expense resulting from the sale of
Kingston Village and Cedar Bay Village in July 1995. Net cash
provided by operating activities was $108,514 for the three
months ended March 31, 1996, a decrease from $353,431 for the same
period in 1995. Net cash provided by operating activities was higher
in the 1995 period primarily due to the release of restricted cash
to property operations and due to the sale of Kingston Village
and Cedar Bay Village.
Rental income for the three months ended March 31, 1996 was
$921,105 compared with $1,228,790 in the first quarter of 1995.
The decrease reflects the sale of Kingston Village and Cedar Bay
Village, partially offset by increases in rental income at the
three remaining properties primarily as a result of increased
rental rates.
Property operating expenses were lower in the first quarter of
1996 compared to the same period in 1995 due to the July 1995
sale of Kingston Village and Cedar Bay Village. This decrease
was partially offset by increases in repairs and maintenance
expenses at Las Colinas and Tierra Catalina due to asphalt and
other miscellaneous repairs. Interest expense and depreciation
and amortization also declined primarily due to the sale of the
two properties. During the first three months of 1996 and 1995,
average occupancy levels at each of the properties were as
follows:
Property 1996 1995
Las Colinas I & II 96% 96%
Ridge Park 95% 93%
Tierra Catalina 91% 95%
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 March 15, 1996 based
upon, among other things, the advice of Partnership
counsel, Skadden, Arps, Slate, Meagher & Flom, the
General Partners adopted a resolution that states,
among other things, if a Change of Control ( as defined
below) occurs, the General Partners may distribute the
Partnership's cash balances not required for its
ordinary course day-to-day operations. "Change of
Control" means any purchase or offer to purchase more
than 10% of the Units that is not approved in advance
by the General Partners. In determining the amount of
the distribution, the General Partners may take into
account all material factors. In addition, the
Partnership will not be obligated to make any
distribution to any partner and no partner will be
entitled to receive any distribution until the General
Partners have declared the distribution and established
a record date and distribution date for the
distribution. The Partnership filed a Form 8-K
disclosing this resolution on March 21, 1996.
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.
HUTTON/CONAM REALTY INVESTORS 81
BY: RI81 REAL ESTATE SERVICES INC.
General Partner
Date: May 13, 1996 BY: /s/ Paul L. Abbott
Director, President, Chief
Executive Officer and
Chief Financial Officer
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<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Mar-31-1996
<CASH> 1,893,497
<SECURITIES> 000
<RECEIVABLES> 000
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<OTHER-SE> 3,337,277
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<NET-INCOME> (57,145)
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