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, 1999
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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
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COMMERCIAL PROPERTIES 1, L.P.
-----------------------------
Exact Name of Registrant as Specified in its Charter
Virginia 13-3075804
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State or Other Jurisdiction of I.R.S. Employer
Incorporation or Organization Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn.: Andre Anderson 10285
- ------------------------------------ -----
Address of Principal Executive Offices Zip Code
(212) 526-3183
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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
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<PAGE>
2
COMMERCIAL PROPERTIES 1, L.P.
AND CONSOLIDATED VENTURES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
At March 31, At December 31,
1999 1998
(unaudited) (audited)
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<S> <C> <C>
Assets
Real estate held for sale $11,373,501 $11,352,896
Cash and cash equivalents 2,297,056 2,123,556
Restricted cash 239,583 207,013
Rent receivable, net of allowance for
doubtful accounts of $22,663 in 1999
and $14,072 in 1998 62,725 14,956
Other assets 51,434 20,347
- -------------------------------------------------------------------------------
Total Assets $14,024,299 $13,718,768
===============================================================================
Liabilities and Partners' Capital
Liabilities:
Mortgage notes payable $ 4,276,382 $ 4,339,648
Accounts payable and accrued expenses 196,437 190,003
Due to affiliates 13,666 4,800
Security deposits payable 189,879 187,794
Prepaid rent 1,853 3,143
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Total Liabilities 4,678,217 4,725,388
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Minority interest 1,929,807 1,792,861
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Partners' Capital (Deficit):
General Partners (650,723) (672,299)
Limited Partners (75,000 units outstanding) 8,066,998 7,872,818
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Total Partners' Capital 7,416,275 7,200,519
- -------------------------------------------------------------------------------
Total Liabilities and Partners' Capital $14,024,299 $13,718,768
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(UNAUDITED)
For the three months ended March 31, 1999
General Limited
Partners Partners Total
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<S> <C> <C> <C>
Balance at December 31, 1998 $(672,299) $7,872,818 $7,200,519
Net Income 21,576 194,180 215,756
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Balance at March 31, 1999 $(650,723) $8,066,998 $7,416,275
===============================================================================
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
3
COMMERCIAL PROPERTIES 1, L.P.
AND CONSOLIDATED VENTURES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended March 31,
1999 1998
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<S> <C> <C>
Income
Rent $ 753,269 $ 660,199
Interest 25,499 139,057
-------------------------
Total Income 778,768 799,256
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Expenses
Property operating 198,061 286,829
Interest 106,030 111,904
General and administrative 113,384 146,559
Bad debt expense 8,591 15,428
-------------------------
Total Expenses 426,066 560,720
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Income before minority interest 352,702 238,536
Minority interest in consolidated
ventures (136,946) (100,130)
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Net Income $ 215,756 $ 138,406
===============================================================================
Net Income Allocated:
To the General Partners $ 2,158 $ 1,384
To the Limited Partners 213,598 137,022
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$ 215,756 $ 138,406
===============================================================================
Per limited partnership unit
(75,000 outstanding) $ 2.85 $ 1.83
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</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
4
COMMERCIAL PROPERTIES 1, L.P.
AND CONSOLIDATED VENTURES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the three months ended March 31,
1999 1998
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Cash Flows From Operating Activities
<S> <C> <C>
Net Income $ 215,756 $ 138,406
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest in consolidated ventures 136,946 100,130
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Restricted cash (32,570) (35,410)
Rent receivable (47,769) 60,138
Other assets (31,087) 43,112
Accounts payable and accrued expenses 6,434 26,572
Due to affiliates 8,866 (1,663)
Security deposits payable 2,085 6,212
Prepaid rent (1,290) 8,526
--------------------------
Net cash provided by operating activities 257,371 346,023
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Cash Flows From Investing Activities
Additions to real estate assets (20,605) (52,323)
--------------------------
Net cash used for investing activities (20,605) (52,323)
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Cash Flows From Financing Activities
Cash distributions -- (13,750,000)
Mortgage principal payments (63,266) (57,393)
--------------------------
Net cash used for financing activities (63,266) (13,807,393)
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Net increase (decrease) in cash and
cash equivalents 173,500 (13,513,693)
Cash and cash equivalents, beginning of period 2,123,556 15,182,204
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Cash and cash equivalents, end of period $2,297,056 $ 1,668,511
===============================================================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 106,030 $ 111,904
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</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
5
COMMERCIAL PROPERTIES 1, L.P.
AND CONSOLIDATED VENTURES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The unaudited interim financial statements should be read in conjunction with
Commercial Properties 1, L.P.'s (the "Partnership") annual 1998 audited
consolidated financial statements within Form 10-K.
The unaudited consolidated 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, 1999 and the results of
operations for the three months ended March 31, 1999 and 1998 and cash flows for
the three months ended March 31, 1999 and 1998 and the statement of partners'
capital (deficit) for the three months ended March 31, 1999. Results of
operations for the period are not necessarily indicative of the results to be
expected for the full year.
The following significant event has occurred subsequent to fiscal year 1998
which requires disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
On April 6, 1999, the Partnership sold Dawson Business Center and Watkins Center
to an unaffiliated partnership, Atlanta North Flexxspace LTD. (the "Buyer"), for
selling prices of approximately $4,695,000 and $14,081,000, respectively, net of
closing adjustments and selling costs. The selling prices were determined by
arm's length negotiations between the Partnership and the Buyer.
As a result of these sales, the General Partners intend to distribute the net
proceeds from the sales together with the Partnership's remaining cash reserves
(after payment of or provision for the Partnership's liabilities and expenses,
and establishment of a reserve for contingencies, if any) during the second
quarter of 1999 and dissolve the Partnership in 1999.
<PAGE>
6
COMMERCIAL PROPERTIES 1, L.P.
AND CONSOLIDATED VENTURES
Part I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
On April 6, 1999, Commercial Properties 1, L.P., a Virginia limited partnership
(the "Partnership"), sold Dawson Business Center and Watkins Center (the
"Properties") to an unaffiliated partnership, Atlanta North Flexxspace LTD. (the
"Buyer"), for selling prices of approximately $4,695,000 and $14,081,000,
respectively, net of closing adjustments and selling costs. The selling prices
were determined by arm's length negotiations between the Partnership and the
Buyer.
As a result of these sales, the General Partners intend to distribute the net
proceeds from the sales together with the Partnership's remaining cash reserves
(after payment of or provision for the Partnership's liabilities and expenses,
and establishment of a reserve for contingencies, if any) during the second
quarter of 1999 and dissolve the Partnership in 1999.
The Partnership's cash and cash equivalents balance totaled $2,297,056 at March
31, 1999, compared with $2,123,556 at December 31, 1998. The increase is
primarily attributable to the cash flows generated from the operations of the
Properties. The Partnership's restricted cash balance, which primarily consists
of security deposits and real estate escrow, increased to $239,583 at March 31,
1999, compared with $207,013 at December 31, 1998. Rent receivable, net of
allowance for doubtful accounts, totaled $62,725 at March 31, 1999 compared with
$14,956 at December 31, 1998. The increase is due to the timing of rental
receipts at the Properties.
Accounts payable and accrued expenses totaled $196,437 at March 31, 1999,
compared with $190,003 at December 31, 1998. The increase is primarily due to
the timing of payments for real estate taxes, administrative and property
expenses. Due to affiliates increased to $13,666 at March 31, 1999, from $4,800
at December 31, 1998, primarily reflecting the 1999 expenses in servicing the
Partnership. Minority interest totaled $1,929,807 at March 31, 1999, compared to
$1,792,861 at December 31, 1998. The increase is attributable to the net income
at the Properties.
Results of Operations
- ---------------------
The Partnership's operations resulted in net income of $215,756 for the three
months ended March 31, 1999, compared with $138,406 for the three months ended
March 31, 1998. The increase is mainly due to higher rental income from the
Properties and lower operating expenses in the 1999 period due to the sale of
the Maitland and Swenson Properties.
Rental income totaled $753,269 for the three months ended March 31, 1999,
compared with $660,199 for the comparable period in 1998. The increase is
primarily attributable to an increase in the base rental income at the
Properties. Interest income totaled $25,499 for the three months ended March 31,
1999, compared with $139,057 for the comparable period a year earlier. The
decrease is primarily due to the higher average cash balances 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 $198,061 for the three months ended March
31, 1999, compared with $286,829 for the same period in 1998. The decrease is
primarily attributable to the sale of the Maitland and Swenson Properties.
General and administrative expenses for the three months ended March 31, 1999
were $113,384, compared with $146,559 for the same period in 1998. The decrease
was primarily due to lower legal costs relating to the property sales and, to a
lesser extent, administrative and postage expenses.
As of March 31, 1999, lease levels at both of the Properties were as follows:
Watkins Center - 94%; Dawson Business Center - 89%.
<PAGE>
7
COMMERCIAL PROPERTIES 1, L.P.
AND CONSOLIDATED VENTURES
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 -
On April 16, 1999, the Partnership filed a Form 8-K reporting
that on April 6, 1999 the Partnership executed a sale of the
Dawson Business Center and Watkins Center.
<PAGE>
8
COMMERCIAL PROPERTIES 1, L.P.
AND CONSOLIDATED VENTURES
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, 1999 BY: /s/Michael T. Marron
-----------------------
Name: Michael T. Marron
Title: Director, President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Mar-31-1999
<CASH> 2,536,639
<SECURITIES> 000
<RECEIVABLES> 62,725
<ALLOWANCES> 22,663
<INVENTORY> 000
<CURRENT-ASSETS> 2,599,364
<PP&E> 11,373,501
<DEPRECIATION> 000
<TOTAL-ASSETS> 14,024,299
<CURRENT-LIABILITIES> 401,835
<BONDS> 4,276,382
000
000
<COMMON> 000
<OTHER-SE> 7,416,275
<TOTAL-LIABILITY-AND-EQUITY> 14,024,299
<SALES> 753,269
<TOTAL-REVENUES> 778,768
<CGS> 000
<TOTAL-COSTS> 198,061
<OTHER-EXPENSES> 113,384
<LOSS-PROVISION> 8,591
<INTEREST-EXPENSE> 106,030
<INCOME-PRETAX> 215,756
<INCOME-TAX> 000
<INCOME-CONTINUING> 215,756
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 215,756
<EPS-PRIMARY> 2.85
<EPS-DILUTED> 2.85
</TABLE>
