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, 1998
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.
Exact Name of Registrant as Specified in its Charter
Virginia 13-3075804
State or Other Jurisdiction of I.R.S Employer
Incorporation or Organization Identification No.
World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3183
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,
1998 1997
Assets
Real estate held for sale $11,283,148 $11,163, 396
Cash and cash equivalents 1,764,040 15,182, 204
Restricted cash 255,611 195,538
Rent receivable,net of allowance
for doubtful accounts
$13,583 in 1998 and $19,183 in 1997 48,048 107,967
Other assets 44,363 50,809
Total Assets $13,395,210 $26,699,914
Liabilities and Partners' Capital
Liabilities:
Mortgage notes payable $4,461,648 $4,577,848
Distribution payable _ 13,750,000
Accounts payable and accrued expenses 229,901 107,192
Due to affiliates _ 6,500
Security deposits payable 187,515 183,381
Prepaid rent 5,223 4,124
Total Liabilities 4,884,287 18,629, 045
Minority interest 1,579,248 1,371,485
Partners' Capital (Deficit):
General Partners (720,089) (722,412)
Limited Partners
(75,000 units outstanding) 7,651,764 7,421,796
Total Partners' Capital 6,931,675 6,699,384
Total Liabilities and
Partners' Capital $13,395,210 $26,699,914
Consolidated Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1998
General Limited Total
Partners Partners
Balance at December 31, 1997 $(722,412) $7,421,796 $6,699,384
Net Income 2,323 229,968 232,291
Balance at June 30, 1998 $(720,089) $7,651,764 $6,931,675
Consolidated Statements of Operations
Three months ended June 30, Six months ended June 30,
1998 1997 1998 1997
Income
Rent $ 690,731 $1,261,981 $1,350,930 $2,531,346
Interest 22,462 2,856 161,519 6,157
Total Income 713,193 1,264,837 1,512,449 2,537,503
Expenses
Property operating 231,204 455,413 518,033 954,429
Interest 110,488 114,029 222,392 231,338
General and
administrative 169,983 59,589 316,542 163,772
Bad debt expense (recovery) _ (2,221) 15,428 11,301
Total Expenses 511,675 626,810 1,072,395 1,360,840
Income before minority
interest 201,518 638,027 440,054 1,176,663
Minority interest in consolidated
ventures (107,633) (20,767) (207,763) (129,442)
Net Income $93,885 $617,260 $232,291 $1,047,221
Net Income Allocated:
To the General Partners $939 $100,422 $2,323 $104,722
To the Limited Partners 92,946 516,838 229,968 942,499
$93,885 $617,260 $232,291 $1,047, 221
Per limited partnership unit
(75,000 outstanding) $1.24 $6.89 $3.07 $12.57
Consolidated Statements of Cash Flows
For the six months ended June 30, 1998 1997
Cash Flows From Operating Activities
Net Income $232,291 $1,047,221
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest in consolidated ventures 207,763 129,442
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Restricted cash (60,073) (76,814)
Rent receivable 59,919 (42,605)
Deferred rent receivable _ (63,612)
Prepaid leasing costs _ (58,526)
Other assets 6,446 (11,696)
Accounts payable and accrued expenses 122,709 196,765
Due to affiliates (6,500) (5,835)
Security deposits payable 4,134 9,552
Prepaid rent 1,099 74,332
Net cash provided by operating activities 567,788 1,198,224
Cash Flows From Investing Activities
Additions to real estate assets (119,752) (557,757)
Net cash used for investing activities (119,752) (557,757)
Cash Flows From Financing Activities
Cash distributions (13,750,000) (666,667)
Mortgage principal payments (116,200) (107,253)
Net cash used for financing activities (13,866,200) (773,920)
Net decrease in cash and cash equivalents (13,418,164) (133,453)
Cash and cash equivalents, beginning of period 15,182,204 301,658
Cash and cash equivalents, end of period $1,764,040 $168,205
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $222,392 $231,338
Notes to the Consolidated Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1997 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, 1998 and the
results of operations for the three and six months ended June 30, 1998 and 1997
and cash flows for the six months ended June 30, 1998 and 1997 and the
statement of partners' capital (deficit) for the six months ended June 30,
1998. 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 1997, 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 is
currently negotiating the terms of a purchase and sale agreement with respect
to the Partnership's two remaining properties, Watkins Center and Dawson
Business Center (the "Properties"). The General Partners anticipate that the
sale will close in the fourth quarter of 1998, however there can be no
assurance that the sale will occur within this time frame. To facilitate our
ability to sell the Properties, the Partnership entered into agreements with
its joint venture partner in both Properties on April 8, 1998, whereby the
joint venture partner waived its right of first refusal to buy each property.
The joint venture partner was paid $25,000 for each waiver. It should be noted
that the mortgage notes secured by Watkins Center were payable in full on June
10, 1998. However, in light of the Partnership's efforts to sell the property,
the lender extended the maturity date to September 9, 1998, in order to promote
sufficient time in which to sell the property. The General Partners will
approach the lender regarding a further extension, if necessary. The
Partnership's cash and cash equivalents balance totaled $1,764,040 at June 30,
1998, compared with $15,182,204 at December 31, 1997. The decrease is
primarily attributable to the payment of a special cash distribution on
February 27, 1998 of the net proceeds received from the sale of Swenson
Business Park - Building B (the "Swenson Property") and Maitland Center Office
Building A (the "Maitland Property"). The Partnership's restricted cash
balance, which primarily consists of security deposits, increased to $255,611
at June 30, 1998, compared with $195,538 at December 31, 1997, due to an
increase in security deposits at Watkins Center. Rent receivable, net of
allowance for doubtful accounts, totaled $48,048 at June 30, 1998 compared with
$107,967 at December 31, 1997. The decrease is due to the timing of rental
receipts at the remaining Properties. Accounts payable and accrued expenses
totaled $229,901 at June 30, 1998, compared with $107,192 at December 31, 1997.
The increase is primarily due to the timing of payments for real estate taxes,
audit fees, administrative and other expenses. Due to affiliates decreased to
$0 at June 30, 1998, from $6,500 at December 31, 1997, primarily reflecting the
timing of certain reimbursement expenses incurred in servicing the Partnership.
Minority interest totaled $1,579,248 at June 30, 1998, compared to $1,371,485
at December 31, 1997. The increase is attributable to the higher allocation of
net income at Watkins Center and Dawson Business Center of $115,397 and
$92,366, respectively.
In order to fund required capital improvements at the Properties and maintain
adequate cash reserves, cash distributions were suspended beginning with the
1997 second quarter distribution. Once the properties are sold, the General
Partners will distribute the net proceeds together with the Partnership's
remaining cash reserves (after payment of or provision for, the Partnership's
liabilities and expenses), and dissolve the Partnership.
Results of Operations
The Partnership's operations resulted in net income of $93,885 and $232,291 for
the three and six months ended June 30, 1998, respectively, compared with
$617,260 and $1,047,221 for the three and six months ended June 30, 1997,
respectively. The decrease is mainly due to lower rental income and lower
property operating expenses in the 1998 periods, as a result of the sale of the
Maitland and Swenson Properties, partially offset by higher general and
administrative expenses for the 1998 periods.
Rental income totaled $690,731 and $1,350,930 for the three and six months
ended June 30, 1998, respectively, compared with $1,261,981 and $2,531,346 for
the comparable periods in 1997. The decreases are primarily attributable to the
sale of the Maitland and Swenson Properties and lower average occupancy at
Dawson Business Center. Interest income totaled $22,462 and $161,519 for the
three and six months ended June 30, 1998, respectively, compared with $2,856
and $6,157 for the comparable periods a year earlier. The increases are
primarily due to higher cash balances maintained by the Partnership from sale
proceeds of the Maitland and Swenson Properties.
Property operating expenses totaled $231,204 and $518,033 for the three and six
months ended June 30, 1998, respectively, compared with $455,413 and $954,429
for the same periods in 1997. The decrease is primarily attributable to lower
repairs and maintenance expenses at the remaining Properties, as well as the
sale of the Maitland and Swenson Properties.
General and administrative expenses for the three and six months ended June 30,
1998, were $169,983 and $316,542, respectively, compared with $59,589 and
$163,772 for the same periods in 1997. The increases for the 1998 periods were
primarily due to higher legal cost relating to the property sales and, to a
lesser extent, professional, administrative and miscellaneous expenses, which
were partially offset by lower administrative, printing and postage expenses.
As of June 30, 1998 lease levels at both of the Properties were as follows:
Watkins Center - 95%; Dawson Business Center - 93%.
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, 1998.
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 14, 1998 BY: /s/ Michael T. Marron
Michael T. Marron
Director, President and Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> June-30-1998
<CASH> 1,764,040
<SECURITIES> 000
<RECEIVABLES> 61,631
<ALLOWANCES> 13,583
<INVENTORY> 000
<CURRENT-ASSETS> 2,112,062
<PP&E> 11,283,148
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000
000
<OTHER-SE> 6,931,675
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<SALES> 000
<TOTAL-REVENUES> 1,512,449
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 834,575
<LOSS-PROVISION> 15,428
<INTEREST-EXPENSE> 222,392
<INCOME-PRETAX> 232,291
<INCOME-TAX> 000
<INCOME-CONTINUING> 232,291
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 232,291
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