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 June 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 June 30, At December 31,
1996 1995
Assets
Real estate investments, at cost:
Land $ 4,871,718 $ 4,871,718
Buildings and improvements 28,566,784 28,180,988
33,438,502 33,052,706
Less accumulated depreciation (14,440,609) (13,642,791)
18,997,893 19,409,915
Cash and cash equivalents 644,903 2,040,428
Restricted cash 256,199 196,362
Rent receivable 124,358 138,460
Deferred rent receivable 200,128 195,197
Prepaid leasing costs, net of accumulated
amortization of $225,244 in 1996 and
$172,695 in 1995 411,276 443,745
Other assets 139,845 87,565
Total Assets $ 20,774,602 $ 22,511,672
Liabilities and Partners' Capital
Liabilities:
Mortgage notes payable $ 4,896,171 $ 4,991,850
Distribution payable 416,667 1,483,333
Accounts payable and accrued expenses 200,674 99,941
Due to affiliates 38,335 37,748
Security deposits payable 195,175 199,507
Prepaid rent 130,988 62,974
Total Liabilities 5,878,010 6,875,353
Minority interest 832,425 832,564
Partners' Capital (Deficit):
General Partners (929,816) (929,816)
Limited Partners (75,000 units outstanding) 14,993,983 15,733,571
Total Partners' Capital 14,064,167 14,803,755
Total Liabilities and Partners' Capital $ 20,774,602 $ 22,511,672
Consolidated Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1996
General Limited
Partners Partners Total
Balance at December 31, 1995 $ (929,816) $15,733,571 $14,803,755
Net income (loss) 75,000 (64,588) 10,412
Distributions (75,000) (675,000) (750,000)
Balance at June 30, 1996 $ (929,816) $14,993,983 $14,064,167
Consolidated Statements of Operations
Three months ended June 30, Six months ended June 30,
1996 1995 1996 1995
Income
Rent $1,112,489 $1,104,052 $2,231,753 $1,970,984
Interest 10,469 44,498 28,025 88,841
Total Income 1,122,958 1,148,550 2,259,778 2,059,825
Expenses
Depreciation and
amortization 437,256 387,318 869,492 822,377
Property operating 475,744 402,131 953,295 783,299
Interest 120,786 125,391 242,912 251,838
General and
administrative 83,054 60,652 174,100 115,120
Bad debt expense 9,706 _ 9,706 21,480
Total Expenses 1,126,546 975,492 2,249,505 1,994,114
Income (loss) before
minority interest (3,588) 173,058 10,273 65,711
Minority interest in loss
of consolidated venture 1,269 1,830 139 23,958
Net Income (Loss) $ (2,319) $ 174,888 $ 10,412 $ 89,669
Net Income (Loss)
Allocated:
To the General Partners $ 41,667 $ 8,967 $ 75,000 $ 8,967
To the Limited Partners (43,986) 165,921 (64,588) 80,702
$ (2,319) $ 174,888 $ 10,412 $ 89,669
Per limited partnership
unit (75,000 outstanding) $(.59) $2.22 $(.86) $1.08
Consolidated Statements of Cash Flows
For the six months ended June 30, 1996 1995
Cash Flows From Operating Activities
Net income $ 10,412 $ 89,669
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 869,492 822,377
Accretion of discount on note receivable _ (56,856)
Minority interest in loss of consolidated ventures (139) (23,958)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Restricted cash (59,837) (78,522)
Rent receivable 14,102 3,049
Deferred rent receivable (4,931) (46,214)
Prepaid leasing costs (36,593) (293,789)
Other assets (52,280) 19,999
Accounts payable and accrued expenses 100,733 121,636
Due to affiliates 587 (8,887)
Security deposits payable (4,332) 31,100
Prepaid rent 68,014 23,936
Net cash provided by operating activities 905,228 603,540
Cash Flows From Investing Activities
Additions to real estate assets (388,408) (362,316)
Net cash used for investing activities (388,408) (362,316)
Cash Flows From Financing Activities
Cash distributions (1,816,666) _
Mortgage principal payments (95,679) (86,754)
Net cash used for financing activities (1,912,345) (86,754)
Net increase (decrease) in cash and cash
equivalents (1,395,525) 154,470
Cash and cash equivalents, beginning of period 2,040,428 1,068,352
Cash and cash equivalents, end of period $ 644,903 $ 1,222,822
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 242,912 $ 251,838
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1995 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of June 30, 1996 and the results of operations for the three and
six months ended June 30, 1996 and 1995 and cash flows for the six months ended
June 30, 1996 and 1995 and the statement of changes in partners' capital
(deficit) for the six months ended June 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
The Partnership had cash and cash equivalents totaling $644,903 at June 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
$256,199 at June 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 Maitland Center Office Building A, the General Partners executed two lease
expansions totaling 8,720 square feet. However, one tenant leasing 6,380 square
feet on a month-to- month basis vacated its space in April 1996. As a result,
the property was 97% leased at June 30, 1996. One lease representing 2,198
square feet is scheduled to expire in November of 1996.
At Watkins Center, the General Partners executed three new leases totaling
4,141 square feet during the quarter. However, four tenants leasing a total of
7,055 square feet vacated their spaces upon the expiration of their respective
leases. As a result, the property was 94% leased at June 30, 1996. Seven
leases totaling 19,143 square feet or 5% of the property's leasable area, are
scheduled to expire during the remainder of 1996.
At Dawson Business Center, during the second quarter of 1996, one tenant
occupying 1,935 square feet pursuant to a lease scheduled to expire in August
1996, renewed its lease for three years. Additionally, two tenants, leasing a
total of 3,922 square feet, vacated the premises upon the expiration of their
respective leases. However, the General Partners re-leased this vacant space
to two new tenants and as a result, the property remained 89% leased at June
30, 1996. Two leases totaling 3,120 square feet, or 4% of the property's
leasable area, are scheduled to expire during the remainder of 1996.
Rent receivable decreased to $124,358 at June 30, 1996 from $138,460 at
December 31, 1995 mainly due to the timing of rental receipts. Other assets
increased to $139,845 at June 30, 1996 from $87,565 at December 31, 1995
primarily due to higher prepaid insurance.
Distribution payable decreased to $416,667 at June 30, 1996, from $1,483,333 at
December 31, 1995. The higher December 31, 1995 total 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 August 1996. This distribution was funded from the Partnership's
second 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 $200,674 at June 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 $130,988 at June 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
The Partnership's operations resulted in net loss of $2,319 and net income of
$10,412 for the three and six months ended June 30, 1996, respectively,
compared with net income of $174,888 and $89,669 for the three and six months
ended June 30, 1995, respectively. The change from net income to net loss for
the three-month period is primarily attributable to higher depreciation and
amortization and property operating expenses. The decrease in net income for
the six-month period is primarily attributable to higher property operating
expenses, partially offset by higher rental income.
Rental income totaled $1,112,489 and $2,231,753 for the three and six months
ended June 30, 1996, compared with $1,104,052 and $1,970,984 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
$10,469 and $28,025 for the three and six months ended June 30, 1996,
respectively, compared with $44,498 and $88,841 for the comparable periods a
year earlier. The decreases are primarily due to lower cash balances in 1996.
Property operating expenses totaled $475,744 and $953,295 for the three and six
months ended June 30, 1996, respectively, compared with $402,131 and $783,299
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 $83,054 and $174,100 for the three
and six months ended June 30, 1996 compared with $60,652 and $115,120 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 June 30, 1996, lease levels at each of the Properties were as follows:
Watkins Center - 94%; Dawson Business Center - 89%; 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 June 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: August 14, 1996 BY: /s/ Kenneth L. Zakin
Director and President
Date: August 14, 1996 BY: /s/ William Caulfield
Vice President and Chief
Financial Officer
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<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Jun-30-1996
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<RECEIVABLES> 324,486
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