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, 1997
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 I.R.S. Employer Identification No.
of Incorporation or Organization
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285
- ------------------------------------- --------
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,
1997 1996
Assets
Real estate held for sale $19,069,188 $18,511,431
Cash and cash equivalents 168,205 301,658
Restricted cash 280,440 203,626
Rent receivable, net of allowance
for doubtful accounts $12,891 in 1997
and $16,960 in 1996 62,571 19,966
Deferred rent receivable 279,001 215,389
Prepaid leasing costs, net of
accumulated amortization of
$298,213 in 1997 and 1996 438,284 379,758
Other assets 92,479 80,783
Total Assets $20,390,168 $19,712,611
Liabilities and Partners' Capital
Liabilities:
Mortgage notes payable $4,688,522 $4,795,775
Distribution payable _ 416,667
Accounts payable and accrued expenses 325,749 128,984
Due to affiliates 6,500 12,335
Security deposits payable 208,529 198,977
Prepaid rent 79,849 5,517
Total Liabilities 5,309,149 5,558,255
Minority interest 966,834 837,392
Partners' Capital (Deficit):
General Partners (850,094) (929,816)
Limited Partners (75,000 units outstanding) 14,964,279 14,246,780
Total Partners' Capital 14,114,185 13,316,964
Total Liabilities and Partners' Capital $ 20,390,168 $19,712,611
Consolidated Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1997
General Limited
Partners Partners Total
Balance at December 31, 1996 $(929,816) $14,246,780 $13,316,964
Net income 104,722 942,499 1,047,221
Distributions (25,000) (225,000) (250,000)
Balance at June 30, 1997 $(850,094) $14,964,279 $14,114,185
Consolidated Statements of Operations
Three months Six month
Income ended June 30, ended June 30,
1997 1996 1997 1996
Rent $1,261,981 $1,112,489 $2,531,346 $2,231,753
Interest 2,856 10,469 6,157 28,025
Total Income 1,264,837 1,122,958 2,537,503 2,259,778
Expenses
Depreciation and amortization -- 437,256 -- 869,492
Property operating 455,413 475,744 954,429 953,295
Interest 114,029 120,786 231,338 242,912
General and administrative 59,589 83,054 163,772 174,100
Bad debt expense/(recovery) (2,221) 9,706 11,301 9,706
Total Expenses 626,810 1,126,546 1,360,840 2,249,505
Income (loss) before
minority interest 638,027 (3,588) 1,176,663 10,273
Minority interest in consolidated
ventures (20,767) 1,269 (129,442) 139
Net Income (Loss) $617,260 $(2,319) $1,047,221 $10,412
Net Income (Loss) Allocated:
To the General Partners $100,422 $41,667 $104,722 $75,000
To the Limited Partners 516,838 (43,986) 942,499 (64,588)
$617,260 $(2,319) $1,047,221 $10,412
Per limited partnership unit
(75,000 outstanding) $6.89 $(.59) $12.57 $(.86)
Consolidated Statements of Cash Flows
For the six months ended June 30, 1997 1996
Cash Flows From Operating Activities
Net income $ 1,047,221 $ 10,412
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation -- 800,430
Amortization -- 69,062
Minority interest in consolidated ventures 129,442 (139)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Restricted cash (76,814) (59,837)
Rent receivable (42,605) 14,102
Deferred rent receivable (63,612) (4,931)
Prepaid leasing costs (58,526) (36,593)
Other assets (11,696) (52,280)
Accounts payable and accrued expenses 196,765 106,433
Due to affiliates (5,835) (5,113)
Security deposits payable 9,552 (4,332)
Prepaid rent 74,332 68,014
Net cash provided by operating activities 1,198,224 905,228
Cash Flows From Investing Activities
Additions to real estate assets (557,757) (388,408)
Net cash used for investing activities (557,757) (388,408)
Cash Flows From Financing Activities
Cash distributions (666,667) (1,816,666)
Mortgage principal payments (107,253) (95,679)
Net cash used for financing activities (773,920) (1,912,345)
Net decrease in cash and cash equivalents (133,453) (1,395,525)
Cash and cash equivalents, beginning of period 301,658 2,040,428
Cash and cash equivalents, end of period $168,205 $644,903
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $231,338 $242,912
Notes to the Consolidated financial statements
The unaudited consolidated interim financial statements should be read in
conjunction with the Partnership's annual 1996 audited financial statements
within Form 10-K.
The unaudited consolidated financial statements include all normal and
reoccurring adjustments which are, in the opinion of management, necessary to
present a fair statement of financial position as of June 30, 1997 and the
results of operations for the three and six months ended June 30, 1997 and 1996
and cash flows for the six months ended June 30, 1997 and 1996 and the
statement of partners' capital (deficit) for the six months ended June 30,
1997. Results of operations for the period are not necessarily indicative of
the results to be expected for the full year.
Reclassification. Certain prior year amounts have been reclassified in order
to conform to the current year's presentation.
No significant events have occurred subsequent to fiscal year 1996, 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 has engaged real estate brokerage firms to assist
with its efforts in marketing for sale the Partnership's four
properties. On August 5, 1997, the Partnership executed a letter
of intent to sell Swenson Business Park - Building B to a
prospective purchaser and the General Partners are currently
negotiating the terms of a formal purchase and sale agreement.
The General Partners currently anticipate that the closing of the
sale will occur in 1997. Additionally, the Partnership has
received several purchase offers for Maitland Center Office
Building A, Dawson Business Center and Watkins Center which the
General Partners are currently evaluating. While the General
Partners currently anticipate that all of the properties will be
sold in 1997, there can be no assurance that the properties will
be sold within this time frame, or that any sale, if completed,
will result in a particular price.
The Partnership had cash and cash equivalents totaling $168,205
at June 30, 1997, compared with $301,658 at December 31, 1996.
The decrease is primarily due to the payment of cash
distributions, real estate additions and mortgage principal
payments, exceeding 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 $280,440 at
June 30, 1997, which consisted of security deposits and funds
reserved for property tax payments.
Rent receivable increased to $62,571 at June 30, 1997, from
$19,966 at December 31, 1996 primarily due to the timing of
rental receipts. Deferred rent receivable totaled $279,001 at
June 30, 1997, compared to $215,389 at December 31, 1996. The
increase largely reflects leases executed in 1996 and 1997.
Prepaid leasing costs increased to $438,284 at June 30, 1997,
from $379,758 at December 31, 1996, primarily due to commissions
paid for new leases at the Partnership's properties. Other
assets increased to $92,479 at June 30, 1997, from $80,783 at
December 31, 1996, mainly due to the prepayment of insurance.
Accounts payable and accrued expenses increased to $325,749 at
June 30, 1997, from $128,984 at December 31, 1996, due to the
timing of payments for real estate taxes. Prepaid rent increased
to $79,849 at June 30, 1997, from $5,517 at December 31, 1996,
mainly reflecting prepaid rents received from tenants at Maitland
Center Office Building A and Swenson Business Park, Building B.
Minority interest totaled $966,834 at June 30, 1997, compared to
$837,392 at December 31, 1996. The increase largely reflects the
higher net income at Watkins Center Joint Venture.
In light of the General Partners' marketing efforts, the
Partnership committed to make several major capital improvements
to better position the properties for sale. In order to fund
these improvements and maintain adequate cash reserves, cash
distributions were suspended beginning with the second quarter
distribution which would have been paid in August 1997. As the
properties are sold, however, the sales proceeds will be
distributed to the partners.
As of June 30,1997, lease levels at each of the Properties were
as follows: Maitland Center Office Building A - 100%; Watkins
Center - 95%; Dawson Business Center - 98%; Swenson Business Park
- - Building B - 100%.
Results of Operations
The Partnership's operations resulted in net income of $617,260
and $1,047,221 for the three and six months ended June 30, 1997,
respectively, compared with a net loss of $2,319 and net income
of $10,412 for the three and six months ended June 30, 1996,
respectively. The change from net loss to net income for the
three-month period and the increase in net income for the six-
month period is primarily attributable to higher rental income
and no depreciation and amortization expense in 1997.
Rental income totaled $1,261,981 and $2,531,346 for the three and
six months ended June 30, 1997, respectively, compared with
$1,112,489 and $2,231,753 for the comparable periods in 1996.
The increases are primarily attributable to higher average
occupancy at Dawson Business Center and Maitland Office Center
Building A, and increased rental rates at Watkins Center.
Interest income totaled $2,856 and $6,157 for the three and six
months ended June 30, 1997, respectively, compared with $10,469
and $28,025 for the comparable periods a year earlier. The
decreases are primarily due to lower cash balances in 1997.
The Partnership did not record depreciation or amortization
expense for the three and six months ended June 30, 1997, due to
the Partnership's properties being reclassified as "Real estate
held for sale." Property operating expenses totaled $455,413 and
$954,429 for the three and six months ended
June 30, 1997, respectively, largely unchanged from $475,744 and
$953,295 for the comparable periods a year earlier.
General and administrative expenses for the three and six months ended June 30,
1997, were $59,589 and $163,772, respectively, compared with $83,054 and
$174,100 for the same periods in 1996. The decreases for the 1997 periods were
primarily due to lower audit and appraisal expenses, which were partially
offset by higher administrative, printing and postage expenses. Minority
interest in consolidated venture totaled $(20,767) and $(129,442) for the three
and six months ended June 30, 1997, compared with $1,269 and $139 for the
comparable periods in 1996, mainly reflecting net income at Watkins Center
Joint Venture in 1997.
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, 1997.
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.
COMMERCIAL PROPERTIES 1, L.P.
BY: CP1 Real Estate Services Inc.
General Partner
Date: August 13, 1997 BY: /s/ Mark J. Marcucci
Director and President
Date: August 13, 1997 BY: /s/ William Caulfield
Vice President and
Chief Financial Officer
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<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Jun-30-1997
<CASH> 168,205
<SECURITIES> 000
<RECEIVABLES> 354,463
<ALLOWANCES> 12,891
<INVENTORY> 000
<CURRENT-ASSETS> 168,205
<PP&E> 19,069,188
<DEPRECIATION> 000
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<CURRENT-LIABILITIES> 5,100,620
<BONDS> 000
<COMMON> 000
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000
<OTHER-SE> 14,114,185
<TOTAL-LIABILITY-AND-EQUITY> 20,390,168
<SALES> 000
<TOTAL-REVENUES> 2,537,503
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 1,118,201
<LOSS-PROVISION> 11,301
<INTEREST-EXPENSE> 231,338
<INCOME-PRETAX> 1,047,221
<INCOME-TAX> 000
<INCOME-CONTINUING> 1,047,221
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 1,047,221
<EPS-PRIMARY> 12.57
<EPS-DILUTED> 12.57
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