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, 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
Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3237
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 March 31, At December 31,
1998 1997
Assets
Real estate held for sale $ 11,215,719 $ 11,163,396
Cash and cash equivalents 1,668,511 15,182,204
Restricted cash 230,948 195,538
Rent receivable, net of allowance for
doubtful accounts $33,256 in 1998 and
$19,183 in 1997 47,829 107,967
Other assets 7,697 50,809
Total Assets $ 13,170,704 $ 26,699,914
Liabilities and Partners' Capital
Liabilities:
Mortgage notes payable $ 4,520,455 $ 4,577,848
Distribution payable _ 13,750,000
Accounts payable and accrued expenses 133,764 107,192
Due to affiliates 4,837 6,500
Security deposits payable 189,593 183,381
Prepaid rent 12,650 4,124
Total Liabilities 4,861,299 18,629,045
Minority interest 1,471,615 1,371,485
Partners' Capital (Deficit):
General Partners (721,028) (722,412)
Limited Partners (75,000 units outstanding) 7,558,818 7,421,796
Total Partners' Capital 6,837,790 6,699,384
Total Liabilities and
Partners' Capital $ 13,170,704 $ 26,699,914
Consolidated Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1998
General Limited
Partners Partners Total
Balance at December 31, 1997 $ (722,412) $ 7,421,796 $ 6,699,384
Net income 1,384 137,022 138,406
Distributions _ _ _
Balance at March 31, 1998 $ (721,028) $ 7,558,818 $ 6,837,790
Consolidated Statements of Operations
For the three months ended March 31, 1998 1997
Income
Rent $ 660,199 $ 1,269,365
Interest 139,057 3,301
Total income 799,256 1,272,666
Expenses
Property operating 286,829 499,016
Interest 111,904 117,309
General and administrative 146,559 104,183
Bad debt expense 15,428 13,522
Total expenses 560,720 734,030
Income before minority interest 238,536 538,636
Minority interest in consolidated venture (100,130) (108,675)
Net Income $ 138,406 $ 429,961
Net Income Allocated:
To the General Partners $ 1,384 $ 4,300
To the Limited Partners 137,022 425,661
$ 138,406 $ 429,961
Per limited partnership unit
(75,000 outstanding) $ 1.83 $ 5.68
Consolidated Statements of Cash Flows
For the three months ended March 31, 1998 1997
Cash Flows From Operating Activities
Net income $ 138,406 $ 429,961
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest in income of
consolidated ventures 100,130 108,675
Increase (decrease) in cash arising from
changes in operating assets and liabilities
Restricted cash (35,410) (45,163)
Rent receivable 60,138 (25,505)
Deferred rent receivable _ (42,070)
Prepaid leasing costs _ (27,030)
Other assets 43,112 29,531
Accounts payable and accrued expenses 26,572 146,580
Due to affiliates (1,663) 10,393
Security deposits payable 6,212 13,261
Prepaid rent 8,526 83,260
Net cash provided by operating activities 346,023 681,893
Cash Flows From Investing Activities
Additions to real estate assets (52,323) (283,741)
Net cash used for investing activities (52,323) (283,741)
Cash Flows From Financing Activities
Cash distributions (13,750,000) (375,000)
Mortgage principal payments (57,393) (51,986)
Net cash used for financing activities (13,807,393) (426,986)
Net decrease in cash and cash equivalents (13,513,693) (28,834)
Cash and cash equivalents, beginning of period 15,182,204 301,658
Cash and cash equivalents, end of period $ 1,668,511 $ 272,824
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 111,904 $ 117,309
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 financial statements include all normal and
recurring adjustments which are, in the opinion of management,
necessary to present a fair statement of financial position as of
March 31, 1998 and the results of operations and cash flows for
the three months ended March 31, 1998 and 1997 and the statement
of partners' capital (deficit) for the three months ended March
31, 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 confirm to the current year's
presentation.
No significant events have occurred subsequent to year end 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 actively marketing its two remaining
properties, Watkins Center and Dawson Business Center (the
"Properties"), for sale. 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, 1997. However, in light of the Partnership's efforts to
sell the property, the lender extended the maturity date to June
10, 1998 in order to provide sufficient time in which to sell the
property. The General Partners will approach the lender
regarding a further extension of the maturity date, if necessary.
On February 27, 1998, the Partnership paid a special cash
distribution to Limited Partners totaling $183.33 per Unit
representing the net proceeds received from the sales of Swenson
Business Park - Building B (the "Swenson Property") and Maitland
Center Office Building A (the "Maitland Property") which were
sold in late 1997. Quarterly cash distributions from operations
were suspended commencing in the second quarter of 1997 in
consideration of the Partnership's marketing efforts and the need
to fund several major capital improvements at the properties to
better position them for sale.
The Partnership's cash and cash equivalents balance totaled
$1,668,511 at March 31, 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 the Swenson and
Maitland Properties. The Partnership also maintained a
restricted cash balance of $230,948 at March 31, 1998,
representing security deposits and funds reserved for property
tax payments.
Rent receivable, net of allowance for doubtful accounts, totaled,
$47,829 at March 31, 1998 compared with $107,967 at December 31,
1997. The decrease is due to the timing of rental receipts at
the Properties.
As of March 31, 1998, lease levels at both of the Properties were
as follows: Watkins Center - 95%; Dawson Business Center - 100%.
Results of Operations
The Partnership's operations resulted in net income of $138,406
for the three months ended
March 31, 1998, compared with $429,961 for the three months ended
March 31, 1997. The decrease is mainly due to lower rental
income in the 1998 period, as a result of the sale of the
Maitland and Swenson Properties.
Rental income totaled $660,199 for the three months ended March
31, 1998, compared with $1,269,365 in the 1997 period. The
decrease is primarily attributable to the sales of the Maitland
and Swenson Properties in 1997. Interest income totaled $139,057
for the three months ended March 31, 1998, compared with $3,301
for the comparable period in 1997. The increase is primarily due
to the Partnership's higher average cash balance in 1998 as a
result of the temporary investment of the proceeds from the sale
of the Maitland and Swenson Properties.
Property operating expenses totaled $286,829 for the three months
ended March 31, 1998, compared with $499,016 in the 1997 period.
The decrease is primarily attributable to the sale of the
Maitland and Swenson Properties, as well as lower repairs and
maintenance expenses at the remaining Properties.
General and administrative expenses for the three months ended
March 31, 1998 were $146,559 compared to $104,183 for the same
period in 1997. The increase is mainly due to higher
professional expenses associated with marketing the two remaining
Properties, which was partially offset by a decease in
administrative expenses.
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 March 31, 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: May 14, 1998 BY: /s/Jeffrey C. Carter
Jeffrey C. Carter
President and Director
Date: May 14, 1998 BY: /s/Michael T. Marron
Michael T. Marron
Vice President and Chief Financial Officer
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<PERIOD-END> Mar-31-1998
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