<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(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, 1998
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 0-10404
Winthrop Partners 81 Limited Partnership
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(Exact name of small business issuer as specified in its charter)
Massachusetts 04-2720480
- -------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Five Cambridge Center, Cambridge, MA 02142-1493
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
Indicate by check mark whether 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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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1998
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
Balance Sheets (Unaudited)
(In Thousands, Except Unit Data)
September 30, December 31,
1998 1997
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<S> <C> <C>
Assets
Real Estate:
Accounted for under the operating method,
at cost, net of accumulated depreciation of $906 $ -- $ 1,353
Accounted for under the operating method
and held for sale 554 --
Accounted for under the financing method -- 147
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554 1,500
Other Assets:
Cash and cash equivalents 557 518
Other assets 5 21
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Total Assets $ 1,116 $ 2,039
======= =======
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 9 $ 50
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Total Liabilities 9 50
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Partners' Capital:
Limited Partners -
Units of Limited Partnership Interest,
$500 stated value per Unit; authorized-70,010 Units;
issued and outstanding - 25,109 Units 1,372 2,268
General Partners' Deficit (265) (279)
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Total Partners' Capital 1,107 1,989
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Total Liabilities and Partners' Capital $ 1,116 $ 2,039
======= =======
</TABLE>
See notes to financial statements.
2 of 12
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Statements of Income (Unaudited)
(In Thousands, Except Unit Data)
For The Three Months Ended For The Nine Months Ended
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Income:
Rental income from real estate leases accounted
for under the operating method $ 27 $ 11 $ 77 $ 117
Interest on short-term investments 17 7 40 19
Interest income on real estate leases accounted
for under the financing method -- 4 2 12
Other income 19 -- 19 --
Gain on sale of building -- -- 967 --
------ ------ ------ ------
Total income 63 22 1,105 148
------ ------ ------ ------
Expenses:
Operating -- -- 24 --
Depreciation -- 12 -- 36
Management fees 1 -- 1 2
General and administrative 21 19 52 55
------ ------ ------ ------
Total expenses 22 31 77 93
------ ------ ------ ------
Net income (loss) $ 41 $ (9) $1,028 $ 55
====== ====== ====== ======
Net income (loss) allocated to general partners $ 3 $ (1) $ 14 $ 4
====== ====== ====== ======
Net income (loss) allocated to limited partners $ 38 $ (8) $1,014 $ 51
====== ====== ====== ======
Net income (loss) per Unit of Limited Partnership Interest $ 1.51 $(0.32) $40.38 $ 2.03
====== ====== ====== ======
Distributions per Unit of Limited Partnership Interest $ -- $ -- $76.07 $ --
====== ====== ====== ======
</TABLE>
See notes to financial statements.
3 of 12
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1998
Statement of Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
Units of
Limited General Limited
Partnership Partners' Partners' Total
Interest Deficit Capital Capital
------- ------- ------- -------
Balance - January 1, 1998 .. 25,109 $ (279) $ 2,268 $ 1,989
Net income .............. 14 1,014 1,028
Distributions ........... -- (1,910) (1,910)
------- ------- ------- -------
Balance - September 30, 1998 25,109 $ (265) $ 1,372 $ 1,107
======= ======= ======= =======
See notes to financial statements.
4 of 12
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Statements of Cash Flows (Unaudited)
(In Thousands)
For The Nine Months Ended
September 30, September 30,
1998 1997
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<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 1,028 $ 55
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation -- 36
Gain on sale of building (967) --
Changes in assets and liabilities:
Decrease in other assets 16 2
Decrease in accounts payable and
accrued expenses (41) (29)
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Net cash provided by operating activities: 36 64
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Cash Flows From Investing Activities:
Minimum lease payments received, net of interest
income earned, on leases accounted for under
the financing method 3 28
Net proceeds from sale of property 1,910 --
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Cash provided by investing activities 1,913 28
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Cash Flows From Financing Activities:
Cash distributions (1,910) --
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Cash used in financing activities (1,910) --
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Net increase in cash and cash equivalents 39 92
Cash and cash equivalents, beginning of period 518 419
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Cash and cash equivalents, end of period $ 557 $ 511
======= =======
</TABLE>
Change in lease classification - see Note 4
See notes to financial statements.
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1998
NOTES TO FINANCIAL STATEMENTS
1. General
The accompanying financial statements, footnotes and discussions
should be read in conjunction with the financial statements, related
footnotes and discussions contained in the Partnership's annual
report on Form 10-KSB for the year ended December 31, 1997.
The financial information contained herein is unaudited. In the
opinion of management, all adjustments necessary for a fair
presentation of such financial information have been included. All
adjustments, except as discussed in Notes 3 and 4, are of a normal
recurring nature. Certain reclassifications have been made to the
June 30, 1998 amounts to conform to the September 30, 1998
presentation. The balance sheet at December 31, 1997, was derived
from audited financial statements at such date.
The results of operations for the nine months ended September 30,
1998 and 1997, are not indicative of the results to be expected for
the full year.
2. Related Party Transactions
Management fees paid or accrued by the Partnership to an affiliate
of the Managing General Partner, totaled $1,000 and $2,000 for the
nine months ended September 30, 1998 and 1997, respectively.
3. Sale of Property
On May 21, 1998, the Partnership sold its Columbus, Ohio property
(formerly leased to GTE North Incorporated) for $1,910,000 (net of
closing costs of $93,000), resulting in a gain of $967,000.
4. Significant Tenant
The sole tenant at the Partnership's remaining property exercised an
option to extend the term of its lease for five years, at an
increase in rent of 8%. In accordance with Statement of Financial
Accounting Standards No. 13, the lease was reclassified as an
operating lease from a direct financing lease on renewal. The
Partnership is currently marketing this property for sale and as a
result no depreciation is being recorded.
6 of 12
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1998
Item 2. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-QSB contain certain
forward-looking statements and involve risks and uncertainties
(including changing market conditions, competitive and regulatory
matters, etc.) detailed in the disclosure contained in this Form
10-QSB and the other filings with the Securities and Exchange
Commission made by the Partnership from time to time. The discussion
of the Partnership's liquidity, capital resources and results of
operations, including forward-looking statements pertaining to such
matters, does not take into account the effects of any changes to
the Partnership's operations. Accordingly, actual results could
differ materially from those projected in the forward-looking
statements as a result of a number of factors, including those
identified herein.
This Item should be read in conjunction with the financial
statements and other items contained elsewhere in the report.
Liquidity and Capital Resources
The Partnership's remaining property is a retail store, which is
leased to a single tenant pursuant to a triple net lease. The
Partnership is currently marketing its remaining property for sale.
If the Partnership is successful in obtaining a purchaser, the
Partnership will be liquidated. The recently extended lease with
Frank's Nursery and Crafts, Inc. expires in January 2003, subject to
extension. The lease was extended during 1998 at an increase in rent
of 8%. On May 21, 1998, the Partnership sold its Columbus, Ohio
property, which was formerly leased to GTE North Incorporated (the
"GTE Lease"), for $1,910,000 (net of closing costs of $93,000)
resulting in a gain of $967,000 for financial reporting purposes.
The Partnership distributed the net sale proceeds of $1,910,000
($76.07 per Unit) during August 1998 and has made no other
distributions during 1997 or 1998.
The Partnership receives rental income from its leased property
which is its primary source of liquidity. Pursuant to the terms of
the lease, the tenant is responsible for substantially all of the
operating expenses with respect to the property including
maintenance, capital improvements, insurance and taxes. The
Partnership would be responsible for similar expenses if the
property were not re-let upon the expiration of such lease.
The level of liquidity based on cash and cash equivalents
experienced a $39,000 increase at September 30, 1998, as compared to
December 31, 1997. The Partnership's $36,000 of cash provided by
operating activities and $1,913,000 of cash provided by investing
activities was significantly offset by cash used in financing
activities of $1,910,000. The Partnership received $1,910,000 of
proceeds on the sale of its Columbus, Ohio property which were
subsequently distributed. At September 30, 1998, the Partnership had
approximately $557,000 in cash and cash equivalents which has been
invested primarily in money market mutual funds.
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1998
Item 2. Management's Discussion and Analysis or Plan of Operation (Continued)
Liquidity and Capital Resources (Continued)
The Partnership requires cash primarily to pay general and
administrative expenses. In addition, if the Partnership is unable
to sell its remaining property prior to its lease expiration, extend
the current lease or re-let the property upon the expiration of the
lease terms, the Partnership would be responsible for operating
expenses, such as real estate taxes, insurance and utility expenses
associated with the property.
Results of Operations
Net income increased by $973,000 for the nine months ended September
30, 1998, as compared to 1997, due to the gain of $967,000 on the
sale of the Columbus, Ohio property.
Revenues, excluding the gain on sale, decreased for the nine months
ended September 30, 1998, as compared to 1997, primarily due to the
expiration of the GTE Lease in April 1997. For the three months
ended September 30, 1998, as compared to 1997, revenues increased by
$41,000, primarily due to increases in rental income of $16,000,
interest income on short-term investments of $10,000 and other
income of $19,000. Rental income increased due to the recently
extended lease with Frank's Nursery and Crafts, Inc., which was
reclassified as an operating lease from a direct financing lease on
renewal. Interest on short-term investments increased due to the net
proceeds received from the sale of the property. Expenses declined
by $16,000, for the nine months ended September 30, 1998, as
compared to 1997, due to decreases in depreciation expense of
$36,000, management fees of $1,000 and general and administrative
expense of $3,000, which were only partially offset by $24,000 of
operating costs associated with the Columbus, Ohio property, which
was vacant prior to its sale. Depreciation expense declined due to
the Partnership not recording depreciation on the Columbus, Ohio
property during 1998, as a result of the Partnership marketing the
property for sale.
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1998
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedule
99. Supplementary Information Required Pursuant to Section 9.4
of the Partnership Agreement.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months ended
September 30, 1998.
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1998
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
BY: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
BY: /s/ Michael L. Ashner
-------------------------------------
Michael L. Ashner
Chief Executive Officer and Director
BY: /s/ Edward V. Williams
-------------------------------------
Edward V. Williams
Chief Financial Officer
Dated: November 6, 1998
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WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1998
Exhibit Index
Exhibit Page No.
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27. Financial Data Schedule -
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 12
11 of 12
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Exhibit 99
WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1998
Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement
1. Statement of Cash Available for Distribution for the three months
ended September 30, 1998:
Net income $ 41,000
Less: Cash to reserves (41,000)
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Cash Available for Distribution $ --
============
Distributions allocated to Limited Partners $ --
============
2. Fees and other compensation paid or accrued by the Partnership to
the General Partners, or their affiliates, during the three months
ended September 30, 1998:
<TABLE>
<CAPTION>
Entity Receiving Form of
Compensation Compensation Amount
- ------------------------- ------------------------------------------- -----------
<S> <C> <C>
Winthrop
Management LLC Property Management Fees $ 690
WFC Realty Co., Inc.
(Initial Limited Partner) Interest in Cash Available for Distribution $ --
</TABLE>
12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Winthrop
Partners 81 Limited Partnership and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 557,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 554,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,116,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,107,000
<TOTAL-LIABILITY-AND-EQUITY> 1,116,000
<SALES> 0
<TOTAL-REVENUES> 1,065,000 <F1>
<CGS> 0
<TOTAL-COSTS> 25,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,028,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,028,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,028,000
<EPS-PRIMARY> 40.38
<EPS-DILUTED> 40.38
<FN>
<F1>
Includes gain on sale of building of $967,000.
</FN>
</TABLE>
