FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 2-76434
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
(Exact name of small business issuer as specified in its charter)
New York 13-3153572
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
230 Park Avenue, Suite 2400
New York, New York 10169
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (212) 697-2330
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
(A Limited Partnership)
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1995
<S> <C> <C>
Assets
Cash and cash equivalents:
Unrestricted $ 313,653
Restricted-tenant security deposits 12,646
Accounts receivable 5,641
Deposits with mortgagee 127,401
Deferred charges 71,817
Investment property:
Land $ 227,104
Building and improvements 2,702,378
Less accumulated depreciation (1,206,421) 1,723,061
$2,254,219
Liabilities and Partners' Equity (Deficit)
Liabilities
Tenant security deposits $ 12,646
Accrued liabilities:
Interest $ 8,691
Real estate taxes 27,967
Professional fees 19,050 55,708
Mortgage payable 1,303,739
Total liabilities 1,372,093
Partners' equity (deficit)
General partner (46,522)
Limited partners 928,648 882,126
$2,254,219
</TABLE>
[FN]
See Notes to Financial Statements
b) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
(A Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental operations $73,188 $ 86,617 $253,085 $ 248,955
Interest income 3,741 2,357 12,261 5,916
Total revenues 76,929 88,974 265,346 254,871
Expenses:
Rental operations 17,784 17,964 58,334 65,864
General and administrative 11,985 12,293 40,863 42,547
Management fees to related
party (Note 3) 1,474 1,608 4,925 4,744
Mortgage interest 26,127 26,718 78,835 77,265
Depreciation and amortization 26,736 30,462 80,280 90,679
Total expenses 84,106 89,045 263,237 281,099
Net (loss) income before
extraordinary item (7,177) (71) 2,109 (26,228)
Extraordinary gain on
extinguishment of debt
(Note 4) -- -- -- 1,590,705
Net (loss) income $(7,177) $ (71) $ 2,109 $1,564,477
Net (loss) income per limited
partner interest:
(Loss) income before
extraordinary item $ (.62) $ (.01) $ .18 $ (2.26)
Extraordinary item -- -- -- 136.94
Net (loss) income per limited
partner interest $ (.62) $ (.01) $ .18 $ 134.68
Limited partnership interests
outstanding 11,455 11,500 11,455 11,500
</TABLE>
[FN]
See Notes to Financial Statements
c) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
<S> <C> <C> <C>
Partners' equity (deficit)
at December 31, 1994 $(46,543) $926,560 $880,017
Net income for the nine months
ended September 30, 1995 21 2,088 2,109
Partners' equity (deficit)
at September 30, 1995 $(46,522) $928,648 $882,126
</TABLE>
[CAPTION]
See Notes to Financial Statements
d) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,109 $ 1,564,477
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation and amortization 80,280 90,679
Extraordinary gain on
extinguishment of debt -- (1,590,705)
Change in other accounts:
Restricted cash (590) 2,530
Accounts receivable (3,772) 6,535
Deferred charges (4,537) (62,470)
Deposits with mortgagee (21,402) (92,944)
Accounts payable (2,084) (145)
Accrued liabilities 22,865 31,595
Deposits and other (21,786) (2,076)
Net cash provided by (used in)
operating activities 51,083 (52,524)
Cash flows from investing activities: -- --
Cash flows from financing activities:
Proceeds from mortgage refinancing -- 1,350,000
Repayment of mortgage payable (22,642) (1,170,669)
Payment to settle joint venture
liabilities -- (450,000)
Payment of partners' distributions (114,550) --
Net cash used by financing
activities (137,192) (270,669)
Net decrease in cash (86,109) (323,193)
Cash at beginning of period 399,762 686,342
Cash at end of period $ 313,653 $ 363,149
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 78,987 $ 68,376
</TABLE>
[FN]
See Notes to Financial Statements
e) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 1995, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1995. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-KSB for the fiscal year ended
December 31, 1994.
Note 2 - General
The financial statements of Drexel Burnham Lambert Real Estate Associates
include the operations of Wendover Business Park Phase I ("Wendover"), which is
the only property the Partnership owns and operates.
Certain reclassifications have been made to the 1994 balances to conform to
the 1995 presentation.
Note 3 - Related Party Transactions
For the nine months ended September 30, 1995, the Partnership paid management
fees of $4,925 to The Wynnewood Company, the parent of the Partnership's General
Partner.
Note 4 - Landmark Liability Settlement
The Partnership previously held a 60% interest in Landmark Associates
("Landmark"), a joint venture which owned and operated the Landmark Resort
Hotel, located in Myrtle Beach, South Carolina. On October 5, 1992, the
foreclosure action initiated by the Landmark mortgagee was effectively
concluded, at which time Landmark ceased operating the Hotel. Landmark was
dissolved in June 1993 and the Partnership assumed its portion of the remaining
liabilities. At the time of dissolution, Landmark had liabilities due to DBLR
and other affiliates amounting to $3,401,175. The Partnership, a 60% general
partner of Landmark, assumed its pro rata share of the obligation in the amount
of $2,040,705. The Partnership, as General Partner, remained jointly and
severally liable for the entire $3,401,175. However, in January 1994 the
Partnership paid $450,000 to the DBL Liquidating Trust, the successor of DBLR,
in full settlement of these liabilities. The settlement resulted in a
$1,590,705 extraordinary gain from the forgiveness of debt in the first quarter
of 1994.
Note 5 - Refinancing of Wendover Mortgage
On January 13, 1994, the Partnership refinanced the then existing senior
mortgage for Wendover with an insurance company and increased the outstanding
principal balance to $1,350,000. The old mortgage, including accrued interest,
in the amount of $1,154,301 was repaid from the loan proceeds received from the
refinancing. The new mortgage matures on February 1, 2001, and requires monthly
payments of $11,292 to be applied first to interest at the rate of 8% per annum
and the balance to reduction of principal. Under the terms of the new mortgage,
Wendover was required to escrow a maximum of $100,000 with the mortgagee until
January 1996 for tenant improvements and leasing commissions. In addition,
Wendover is required to make monthly escrow deposits with the mortgagee for real
estate taxes and insurance.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
For the nine months ending September 30, 1995, the Partnership realized net
income of $2,109, compared to net income of $1,564,477 for the corresponding
period of 1994. The decrease in net income is due primarily to the non-
recurring gain on extinguishment of debt in the first quarter of 1994 (see Note
4 of the financial statements). Total revenues for the nine month period
increased primarily due to increased interest income which resulted from higher
interest rates earned on certificates of deposit and interest earned on the
capital improvement escrow. Operating expenses decreased as a result of lower
repair and maintenance costs at Wendover in the first nine months of 1995
compared to the corresponding period of 1994.
The Partnership recognized a net loss of $7,177 for the three months ended
September 30, 1995 compared to a net loss of $71 for the corresponding period of
1994. The increase in net loss was primarily due to a decrease in rental
revenue during the third quarter of 1995. Occupancy during the third quarter of
1995 averaged 86% compared to 99% during the corresponding period of 1994. With
this exception, the Partnership's results of operations were comparable to those
for the corresponding period of the prior year.
Liquidity and Capital Resources
At September 30, 1995, the Partnership had unrestricted cash on hand
(including shares of money market funds and a certificate of deposit) of
$313,653. In addition, a $94,000 escrow fund held by the mortgage lender for
the Wendover property is to be used for tenant improvement and leasing costs in
connection with new leases or renewals of existing leases. Any remaining funds
will be released to the Partnership in January 1996. The present cash reserves
of the Partnership are believed to be sufficient to meet the foreseeable needs
of the Partnership.
At September 30, 1995, the Partnership's remaining property was approximately
86% leased. A new tenant has executed a lease for 2,610 square feet effective
October 1, 1995, and negotiations are in progress relative to the remainder of
the space. Any tenant improvement costs or leasing commissions will be paid
from the aforementioned reserve. An additional 17,477 square feet
(approximately 26% of the leasable square footage) is occupied by a national
company which has been a tenant for approximately 10 years although its lease is
on a month-to-month basis. While vacancy of this space is not anticipated, if
the month-to-month tenant vacated and the existing vacant space remained empty,
it is probable the property would experience a negative cash flow until part of
the space was released.
The Partnership has not entered into any material commitments for capital
expenditures as of September 30, 1995. In December 1994, the Partnership
approved a distribution of $10 per partnership interest, totalling $114,550
which was paid from existing cash reserves in February 1995.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 1995.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
(Registrant)
By: DBL Properties Corporation
(General Partner)
By: /s/William D. Clements
William D. Clements
President
Date: November 9, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary finanical information extracted from Drexel
Burnham Lambert Real Estate Associates 1995 Third Quarter 10-QSB and is
qualified in its entirety by reference to such 10-QSB.
</LEGEND>
<CIK> 0000700951
<NAME> DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 313,653
<SECURITIES> 0
<RECEIVABLES> 5,641
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 2,929,482
<DEPRECIATION> 1,206,421
<TOTAL-ASSETS> 2,254,219
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 1,303,739
<COMMON> 0
0
0
<OTHER-SE> 882,126
<TOTAL-LIABILITY-AND-EQUITY> 2,254,219
<SALES> 0
<TOTAL-REVENUES> 265,346
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 263,237
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 78,835
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,109
<EPS-PRIMARY> .18
<EPS-DILUTED> 0
<FN>
<F1>
The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
