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, 1995
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: 0-11081
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HUTTON/GSH COMMERCIAL PROPERTIES 1
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(Exact name of registrant as specified in its charter)
Virginia 13-3075804
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 World Financial Center, 29th Floor, New York, NY 10285
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(Address of principal executive offices) (Zip Code)
(212) 526-3237
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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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Consolidated Balance Sheets
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March 31, December 31,
Assets 1995 1994
- - - - - - ------------- ---------- ----------
Real estate investments, at cost:
Land $ 4,871,718 $ 4,871,718
Buildings and improvements 27,142,147 27,225,346
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32,013,865 32,097,064
Less- accumulated depreciation (12,718,084) (12,413,346)
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19,295,781 19,683,718
Cash and cash equivalents 1,114,897 1,068,352
Restricted cash 208,722 162,969
Accounts and rent receivable, net of
allowance for doubtful accounts of
$27,488 in 1995 and $51,065 in 1994 120,287 81,493
Prepaid leasing costs, net of accumulated
amortization of $89,982 in 1995 and
$67,871 in 1994 379,680 256,178
Note receivable, net of unaccreted discount
of $47,380 in 1995 and $75,808 in 1994 1,452,620 1,424,192
Deferred rent receivable 151,889 126,572
Other assets 70,683 115,609
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Total Assets $22,794,559 $22,919,083
========== ==========
Liabilities and Partners' Capital
Liabilities:
Mortgage notes payable $ 5,126,838 $ 5,169,687
Accounts payable and accrued expenses 134,530 106,717
Due to affiliates 25,955 46,408
Security deposits payable 185,370 170,179
Prepaid rent 11,416 8,295
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Total Liabilities 5,484,109 5,501,286
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Minority interest 818,389 840,517
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Partners' Capital (Deficit):
General Partners (929,816) (929,816)
Limited Partners 17,421,877 17,507,096
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Total Partners' Capital 16,492,061 16,577,280
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Total Liabilities and Partners' Capital $22,794,559 $22,919,083
========== ==========
See accompanying notes to the consolidated financial statements.
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Consolidated Statements of Operations
For the three months ended March 31, 1995 and 1994
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Income 1995 1994
- - - - - - --------------------- --------- ---------
Rent $ 866,932 $ 865,138
Interest 44,343 37,043
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Total Income 911,275 902,181
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Expenses
- - - - - - ---------------------
Depreciation and amortization 435,059 291,965
Property operating 381,168 330,815
Interest 126,447 130,423
General and administrative 54,468 64,746
Bad debt expense 21,480 7,168
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Total Expenses 1,018,622 825,117
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Income (loss) before minority interest (107,347) 77,064
Minority interest 22,128 2,716
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Net Income (Loss) $ (85,219) $ 79,780
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Net Income (Loss) Allocated:
To the General Partners $ -- $ 7,978
To the Limited Partners (85,219) 71,802
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$ (85,219) $ 79,780
========= =========
Per limited partnership unit
(75,000 outstanding) $(1.14) $0.96
========= =========
See accompanying notes to the consolidated financial statements.
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Consolidated Statement of Partners' Capital
For the three months ended March 31, 1995
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General Limited
Partners Partners Total
-------- ---------- ----------
Balance at December 31, 1994 $(929,816) $17,507,096 $16,577,280
Net loss -- (85,219) (85,219)
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Balance at March 31, 1995 $(929,816) $17,421,877 $16,492,061
======== ========== ==========
See accompanying notes to the consolidated financial statements.
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Consolidated Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
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Cash Flows from Operating Activities: 1995 1994
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Net income (loss) $ (85,219) $ 79,780
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 435,059 291,965
Accretion of discount on note receivable (28,428) (25,612)
Minority interest in income (loss)
of consolidated ventures (22,128) (2,716)
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Restricted cash (45,753) (43,088)
Accounts and rent receivable 23,954 18,817
Prepaid leasing costs (149,324) (18,151)
Deferred rent receivable (25,317) (25,267)
Other assets 44,926 15,475
Due from affiliates (62,748) 3,453
Accounts payable and accrued expenses 27,812 47,462
Due to affiliates (20,453) (15,236)
Security deposits payable 15,191 19,932
Prepaid rent 3,121 (104,083)
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Net cash provided by operating activities 110,693 242,731
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Cash Flows from Investing Activities:
Additions to real estate (21,299) (155,132)
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Net cash used for investing activities (21,299) (155,132)
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Cash Flows from Financing Activities:
Mortgage principal payments (42,849) (38,873)
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Net cash used for financing activities (42,849) (38,873)
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Net increase in cash and cash equivalents 46,545 48,726
Cash and cash equivalents at beginning of period 1,068,352 2,063,960
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Cash and cash equivalents at end of period $1,114,897 $2,112,686
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 126,447 $ 130,423
========= =========
See accompanying notes to the consolidated financial statements.
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Notes to the Consolidated Financial Statements
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The unaudited financial statements presented should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited interim financial statements include all adjustments which are,
in the opinion of management, necessary to fairly present the statement of
financial position as of March 31, 1995 and the results of operations, and cash
flows for the three months ended March 31, 1995 and 1994 and the statement of
changes in partners' capital for the three months ended March 31, 1995.
Results of operations for the period are not necessarily indicative of the
results to be expected for the full year.
The following significant events have occurred subsequent to fiscal year 1994,
or material contingencies exist which require disclosure in this interim report
per Regulation S-X, Rule 10-01, Paragraph (a) (5).
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Part I, Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
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Liquidity and Capital Resources
- - - - - - -------------------------------
The Partnership's cash and cash equivalents balance was $1,114,897 at March 31,
1995, compared with $1,068,352 at December 31, 1994. The cash and cash
equivalents balance is invested in unaffiliated money market funds and includes
funds held for anticipated tenant improvements and leasing commissions. The
increase of $46,545 from December 31, 1994 is primarily attributable to net
cash provided by operating activities exceeding net cash used for tenant
improvements and mortgage principal payments. Additionally, the Partnership
had a restricted cash balance of $208,722 at March 31, 1995, compared to
$162,969 at December 31, 1994 which was made up of security deposits and cash
reserved to pay real estate taxes at Watkins Center.
As previously reported, JWP Information Systems ("JWP") prematurely vacated the
Swenson Business Park - Building B in the third quarter of 1993 and
subsequently filed for liquidation under Chapter 7 of the U.S. Bankruptcy Code.
On January 31, 1995, the General Partners executed a ten-year lease with
Allstate Insurance Company ("Allstate") for 100% of the property's leasable
space. Allstate began making rental payments on April 15, 1995, although they
are not expected to take occupancy until July 1995. The lease requires that
the Partnership fund in excess of $1.2 million in leasing commissions and
tenant improvements. To date, the Partnership has paid $131,733 in leasing
commissions and $22,452 in tenant improvements relating to the Allstate lease.
Prepaid leasing costs increased to $379,680 at March 31, 1995 from $256,178 at
December 31, 1994, primarily as a result of commissions paid corresponding to
the Allstate lease. The note receivable increased to $1,452,620 at March 31,
1995 from $1,424,192 at December 31, 1994, reflecting the accretion of the
discount taken by the Partnership on the $1,500,000 non-interest bearing/profit
participation second subordinated five year note, due August 20, 1995, which
the Partnership holds on the Ridgeway Office Building.
As previously reported, cash distributions were suspended beginning with the
second quarter of 1993 to increase the Partnership's cash reserve in order to
fund tenant improvements and leasing costs at the Partnership's properties.
The General Partners anticipate that cash distributions will remain suspended
for the foreseeable future.
Results of Operations
- - - - - - ---------------------
Partnership operations resulted in a net loss of $85,219 for the quarter ended
March 31, 1995, compared to net income of $79,780 for the quarter ended March
31, 1994. The change from net income to net loss is due primarily to increases
in depreciation and amortization expense and property operating expenses.
Rental income totaled $866,932 for the quarter ended March 31, 1995, compared
with $865,138 for the quarter ended March 31, 1994. The increase in 1995 is
largely attributable to an increase in rental income at Watkins and Dawson
Business Centers resulting from new leases executed at both properties,
partially offset by lower rental income at Maitland Center Office Building A
due to a reduction in rent paid by AT&T following the renewal of its lease in
April 1994.
Depreciation expense totaled $435,059 for the quarter ended March 31, 1995,
compared with $291,965 for the quarter ended March 31, 1994. The increase is
due to tenant improvements completed during the last three quarters of 1994 of
approximately $1,200,000 which are being depreciated over the terms of the
corresponding leases.
Property operating expenses totaled $381,168 for the quarter ended March 31,
1995, compared with $330,815 for the quarter ended March 31, 1994. The
increase in operating expenses is mainly due to higher payroll and insurance
expense at Watkins, Dawson and Maitland Centers, and higher utilities expense
at Maitland Center. The Partnership incurred bad debt expense of $21,480 for
the quarter ended March 31, 1995, compared to $7,168 in 1994. The increase in
bad debt expense is largely due to the reserving and direct write off of
uncollectible rent receivable at Watkins Center.
Minority interest totaled $22,128 for the quarter ended March 31, 1995,
compared with $2,716 for the quarter ended March 31, 1994. The increase is
primarily due to Watkins Center incurring a higher net loss for the quarter
ended March 31, 1995 as compared to the same period in 1994.
As of March 31, 1995, the lease levels of the Properties were as follows:
Watkins Center - 95%; Dawson Business Center - 87%; Maitland Center Office
Building A - 96%; Swenson Business Park, Building B - 100%.
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the three month period covered by this report.
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SIGNATURES
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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/GSH COMMERCIAL PROPERTIES 1
BY: CP1 REAL ESTATE SERVICES INC.
General Partner
Date: May 12, 1995
BY: /s/Kenneth L. Zakin
Name: Kenneth L. Zakin
Title: Director and President
Date: May 12, 1995
BY: /s/William Caulfield
Name: William Caulfield
Title: Vice President and Chief
Financial Officer
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<PERIOD-END> MAR-31-1995
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<SECURITIES> 000
<RECEIVABLES> 120,287
<ALLOWANCES> 000
<INVENTORY> 000
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<DEPRECIATION> (12,718,084)
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000
<OTHER-SE> 000
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<INCOME-PRETAX> (85,219)
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<INCOME-CONTINUING> (85,219)
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