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 September 30, 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: 0-11081
COMMERCIAL PROPERTIES 1, L.P.
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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
Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 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 ____
Consolidated Balance Sheets At September 30, At December 31,
1996 1995
Assets
Real estate investments, at cost:
Land $ 4,871,718 $ 4,871,718
Buildings and improvements 28,674,249 28,180,988
33,545,967 33,052,706
Less accumulated depreciation (14,853,847) (13,642,791)
18,692,120 19,409,915
Cash and cash equivalents 612,722 2,040,428
Restricted cash 229,712 196,362
Rent receivable 56,216 138,460
Deferred rent receivable 205,525 195,197
Prepaid leasing costs, net of accumulated
amortization of $261,088 in 1996 and
$172,695 in 1995 401,136 443,745
Other assets 118,693 87,565
Total Assets $ 20,316,124 $ 22,511,672
Liabilities and Partners' Capital
Liabilities:
Mortgage notes payable $ 4,846,575 $ 4,991,850
Distribution payable 416,667 1,483,333
Accounts payable and accrued expenses 207,787 99,941
Due to affiliates 28,000 37,748
Security deposits payable 197,499 199,507
Prepaid rent 90,304 62,974
Total Liabilities 5,786,832 6,875,353
Minority interest 834,047 832,564
Partners' Capital (Deficit):
General Partners (929,816) (929,816)
Limited Partners (75,000 units outstanding) 14,625,061 15,733,571
Total Partners' Capital 13,695,245 14,803,755
Total Liabilities and Partners' Capital $ 20,316,124 $ 22,511,672
Consolidated Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1996
General Limited
Partners Partners Total
Balance at December 31, 1995 $(929,816) $15,733,571 $14,803,755
Net income (loss) 116,667 (58,510) 58,157
Distributions (116,667) (1,050,000) (1,166,667)
Balance at September 30, 1996 $(929,816) $14,625,061 $13,695,245
Consolidated Statements of Operations
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
Income
Rent $1,109,834 $1,002,573 $3,341,587 $2,973,557
Interest 7,365 32,868 35,390 121,709
Total Income 1,117,199 1,035,441 3,376,977 3,095,266
Expenses
Depreciation and amortization 449,083 458,035 1,318,575 1,280,412
Property operating 422,580 373,182 1,375,875 1,156,481
Interest 113,364 124,309 356,276 376,147
General and administrative 71,435 69,307 245,535 184,427
Bad debt expense 11,370 - 21,076 21,480
Total Expenses 1,067,832 1,024,833 3,317,337 3,018,947
Income before minority
interest 49,367 10,608 59,640 76,319
Minority interest
in consolidated ventures (1,622) (10,293) (1,483) 13,665
Net Income $ 47,745 $ 315 $ 58,157 $ 89,984
Net Income (Loss) Allocated:
To the General Partners $ 41,667 $ 31 $ 116,667 $ 8,998
To the Limited Partners 6,078 284 (58,510) 80,986
$ 47,745 $ 315 $ 58,157 $ 89,984
Per limited partnership unit
(75,000 outstanding) $.08 $.00 $(.78) $1.08
Consolidated Statements of Cash Flows
For the nine months ended September 30, 1996 1995
Cash Flows From Operating Activities
Net income $ 58,157 $ 89,984
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,318,575 1,280,412
Accretion of discount on note receivable - (75,808)
Minority interest in consolidated ventures 1,483 (13,665)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Restricted cash (33,350) (60,058)
Rent receivable 82,244 (8,367)
Deferred rent receivable (10,328) (52,497)
Prepaid leasing costs (62,298) (289,662)
Other assets (31,128) (6,893)
Accounts payable and accrued expenses 107,846 109,215
Due to affiliates (9,748) (9,180)
Security deposits payable (2,008) 22,539
Prepaid rent 27,330 84,999
Net cash provided by operating activities 1,446,775 1,071,019
Cash Flows From Investing Activities
Additions to real estate assets (495,873) (1,163,694)
Net cash used for investing activities (495,873) (1,163,694)
Cash Flows From Financing Activities
Cash distributions (2,233,333) -
Mortgage principal payments (145,275) (131,741)
Net cash used for financing activities (2,378,608) (131,741)
Net decrease in cash and cash equivalents (1,427,706) (224,416)
Cash and cash equivalents, beginning of period 2,040,428 1,068,352
Cash and cash equivalents, end of period $ 612,722 $ 843,936
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 356,276 $ 376,147
Notes to the Consolidated financial statements
The unaudited consolidated interim financial statements should be read in
conjunction with the Partnership's annual 1995 audited 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 September 30, 1996 and the results of operations for
the three and nine months ended September 30, 1996 and 1995 and cash flows for
the nine months ended September 30, 1996 and 1995 and the statement of
partners' capital (deficit) for the nine months ended September 30, 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 would 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
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The Partnership had cash and cash equivalents totaling $612,722 at September
30, 1996, compared with $2,040,428 at December 31, 1995. The decrease is
primarily due to the payment of a special cash distribution on February 9,
1996, partially offset by net cash provided by operating activities. The cash
and cash equivalents balance includes funds held as a working capital reserve
to fund tenant improvements and leasing commissions, in addition to cash
generated from operations. The Partnership also had a restricted cash balance
of $229,712 at September 30, 1996, compared with $196,362 at December 31, 1995.
The restricted cash balance, which consists of security deposits and funds
reserved for property tax payments, increased primarily due to contributions to
the reserve for property tax payments.
At Watkins Center, the General Partners executed seven new leases in the third
quarter totaling 12,590 square feet. However, two tenants leasing a total of
3,604 square feet vacated their spaces upon the expiration of their respective
leases. Additionally, four tenants leasing a total of 6,026 square feet
terminated their leases prematurely. As a result, the property remained 94%
leased at September 30, 1996. Six leases totaling 17,804 square feet or 5% of
the property's leasable area, are scheduled to expire during the remainder of
1996.
At Dawson Business Center, the General Partners executed two new leases
totaling 3,193 square feet. Additionally, two tenants occupying a total of
3,000 square feet, whose leases were scheduled to expire during the quarter,
renewed their respective leases for three years. However, a tenant leasing
1,470 square feet terminated its lease prematurely. As a result, the property
was 91% leased at September 30, 1996. There are no scheduled lease expirations
through year-end.
Rent receivable decreased to $56,216 at September 30, 1996 from $138,460 at
December 31, 1995 mainly due to the timing of rental receipts. Other assets
increased to $118,693 at September 30, 1996 from $87,565 at December 31, 1995
primarily due to higher prepaid insurance.
Distribution payable decreased to $416,667 at September 30, 1996, from
$1,483,333 at December 31, 1995. The higher year- end balance reflects a
quarterly cash distribution in the amount of $333,333 in addition to a special
distribution of $1,150,000, representing proceeds received in full satisfaction
of the note receivable on the 965 Ridgelake Office Building. These proceeds
were distributed to Partners on February 9, 1996.
A cash distribution in the amount of $5.00 per Unit will be paid to the Limited
Partners in November 1996. This distribution was funded from the Partnership's
third quarter operations and was declared after a review of the Partnership's
anticipated future cash needs and current cash position.
Accounts payable and accrued expenses totaled $207,787 at September 30, 1996
compared with $99,941 at December 31, 1995. The increase is largely due to the
timing of real estate tax payments at three of the Partnership's four
properties. Prepaid rent totaled $90,304 at September 30, 1996 compared with
$62,974 at December 31, 1995. The increase is primarily attributable to
prepaid rental payments made by tenants at Swenson Business Park - Building B,
Watkins Center and Dawson Business Center.
Results of Operations
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The Partnership's operations resulted in net income of $47,745 and $58,157 for
the three and nine months ended September 30, 1996, respectively, compared with
net income of $315 and $89,984 for the three and nine months ended September
30, 1995, respectively. The increase for the three-month period is primarily
attributable to higher rental income, while the decrease for the nine-month
period is primarily attributable to higher property operating expenses,
partially offset by higher rental income.
Rental income totaled $1,109,834 and $3,341,587 for the three and nine months
ended September 30, 1996, compared with $1,002,573 and $2,973,557 for the
comparable periods in 1995. The increases are primarily attributable to rental
income received from a tenant leasing 100% of Swenson Business Park - Building
B, pursuant to a lease which commenced in April 1995. Interest income totaled
$7,365 and $35,390 for the three and nine months ended September 30, 1996,
respectively, compared with $32,868 and $121,709 for the comparable periods a
year earlier. The decreases are primarily due to lower cash balances in 1996.
Property operating expenses totaled $422,580 and $1,375,875 for the three and
nine months ended September 30, 1996, respectively, compared with $373,182 and
$1,156,481 for the comparable periods a year earlier. The increase is largely
attributable to higher repair and maintenance expenses at all of the
Partnership's properties, in addition to higher electric utility expenses at
Maitland Center Office Building A and Swenson Business Park Building B.
General and administrative expenses totaled $71,435 and $245,535 for the three
and nine months ended September 30, 1996 compared with $69,307 and $184,427 for
the same periods in 1995. The increases are largely due to higher Partnership
administrative expenses, appraisal costs and additional postage and mailing
fees associated with the reinstatement of quarterly distributions.
As of September 30, 1996, lease levels at each of the Properties were as
follows: Watkins Center - 94%; Dawson Business Center 91%; Maitland Center
Office Building A - 97%; Swenson Business Park, Building B - 100%.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended September 30, 1996.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMMERCIAL PROPERTIES 1, L.P.
BY: CP1 Real Estate Services Inc.
General Partner
Date: November 13, 1996 BY: /s/ Kenneth L. Zakin
Director and President
Date: November 13, 1996 BY: /s/ William Caulfield
Vice President and Chief
Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Sep-30-1996
<CASH> 612,722
<SECURITIES> 000
<RECEIVABLES> 261,741
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 668,938
<PP&E> 33,545,967
<DEPRECIATION> 14,853,847
<TOTAL-ASSETS> 20,316,124
<CURRENT-LIABILITIES> 940,257
<BONDS> 000
<COMMON> 000
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000
<OTHER-SE> 13,695,245
<TOTAL-LIABILITY-AND-EQUITY> 20,316,124
<SALES> 000
<TOTAL-REVENUES> 3,376,977
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 2,939,985
<LOSS-PROVISION> 21,076
<INTEREST-EXPENSE> 356,276
<INCOME-PRETAX> 58,157
<INCOME-TAX> 000
<INCOME-CONTINUING> 58,157
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 58,157
<EPS-PRIMARY> ($.78)
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