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 June 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
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
(A Limited Partnership)
BALANCE SHEET
(Unaudited)
June 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash and cash equivalents:
Unrestricted $ 295,269
Restricted-tenant security deposits 12,056
Accounts receivable 12,014
Deposits with mortgagee 115,663
Deferred charges 76,954
Investment property:
Land $ 227,104
Building and improvements 2,702,378
Less accumulated depreciation (1,183,868) 1,745,614
$2,257,570
Liabilities and Partners' Equity (Deficit)
Liabilities
Deposits and other tenant liabilities $ 15,027
Accrued liabilities:
Interest $ 8,743
Real estate taxes 20,262
Professional fees 12,798 41,803
Mortgage payable 1,311,437
Total liabilities 1,368,267
Partners' equity (deficit)
General partner (46,450)
Limited partners 935,753 889,303
$2,257,570
</TABLE>
See Notes to Financial Statements
1
<PAGE>
b) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
(A Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
<S> <C> <C> <C> <C>
1995 1994 1995 1994
Revenues:
Rental operations $88,249 $ 86,720 $179,897 $ 162,338
Interest income 5,088 1,747 8,520 3,559
Total revenues 93,337 88,467 188,417 165,897
Expenses:
Rental operations 22,399 25,800 40,550 47,900
General and administrative 16,356 18,071 28,878 30,254
Management fees to related
party (Note 3) 1,751 1,609 3,451 3,136
Mortgage interest 26,279 26,862 52,708 50,547
Depreciation and amortization 26,736 30,879 53,544 60,217
Total expenses 93,521 103,221 179,131 192,054
Net (loss) income before
extraordinary item
(184) (14,754) 9,286 (26,157)
Extraordinary item-gain on
extinguishment of debt
(Note 4) -- -- -- 1,590,705
Net (loss) income $ (184) $(14,754) $ 9,286 $1,564,548
Net (loss) income per limited
partner interest:
(Loss) income before
extraordinary item $ (.02) $ (1.27) $ .80 $ (2.25)
Extraordinary item -- -- -- 136.94
Net (loss) income per limited
partner interest $ (.02) $ (1.27) $ .80 $ 134.69
Limited partnership interests
outstanding 11,455 11,500 11,455 11,500
</TABLE>
See Notes to Financial Statements
2
<PAGE>
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> <C>
Partners' (deficit) equity
at December 31, 1994 $(46,543) $926,560 $880,017
Net income for the six
months ended June 30, 1995 93 9,193 9,286
Partners' (deficit) equity
at June 30, 1995 $(46,450) $935,753 $889,303
</TABLE>
See Notes to Financial Statements
3
<PAGE>
d) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
<S> <C> <C>
1995 1994
Cash flows from operating activities:
Net income $ 9,286 $ 1,564,548
Adjustments to reconcile net income to
net cash provided (used) by operating
activities:
Depreciation and amortization 53,544 60,217
Extraordinary item-gain on
extinguishment of debt -- (1,590,705)
Change in certain other accounts:
Restricted cash -- 2,530
Accounts receivable (10,145) 11,324
Deferred charges (5,491) (61,822)
Deposits with mortgagee (9,664) (85,512)
Accounts payable (2,084) 1,793
Accrued liabilities 8,960 6,059
Deposits and other (19,405) (4,184)
Net cash provided (used) by
operating activities 25,001 (95,752)
Cash flows from investing activities: -- --
</TABLE>
See Notes to Financial Statements
4
<PAGE>
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
<S> <C> <C>
1995 1994
Cash flows from financing activities:
Proceeds from mortgage refinancing $ -- $1,350,000
Repayment of mortgage payable (14,944) (1,165,915)
Payment to settle joint venture
liabilities -- (450,000)
Partners' distributions paid (114,550) --
Net cash used by financing
activities (129,494) (265,915)
Net decrease in cash (104,493) (361,667)
Cash at beginning of period 399,762 686,342
Cash at end of period $ 295,269 $ 324,675
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 52,808 $ 50,546
</TABLE>
See Notes to Financial Statements
5
<PAGE>
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 six month periods ended
June 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 six months ended June 30, 1995, the Partnership paid
management fees of $3,451 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.
6
<PAGE>
Note 4 - Landmark Liability Settlement (continued)
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.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
For the six months ending June 30, 1995, the Partnership
recognized net income of $9,286, compared to net income of $1,564,548
for the corresponding period in 1994. The decrease in income is due
primarily to a gain on extinguishment of debt in the first quarter of
1994 (see Note 4 of the financial statements) as a result of the
Partnership paying $450,000 in full settlement of the remaining
liabilities of Landmark Associates. The Partnership's pro rata share of
the liabilities totaled $2,040,705; therefore, an extraordinary gain of
$1,590,705 was recognized at the time of the settlement in the first
quarter of 1994. Rental income increased primarily due to a new tenant
at Wendover paying a higher rental rate than the previous tenant.
Operating expenses decreased as a result of lower repair and maintenance
costs at Wendover in the six months ended June 30, 1995, compared to the
corresponding period in 1994.
Liquidity and Capital Resources
On June 30, 1995, the Partnership had unrestricted cash on hand
(including shares of money market funds and a certificate of deposit) of
$295,269. In addition, a $94,000 escrow fund held by the mortgage
lender for the Wendover property is to be used for tenant improvements
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.
As of June 30, 1995, the Partnership's remaining property was
approximately 86% leased. An existing tenant, occupying 2,698 square
feet (approximately 4% of the leasable square footage) has a lease which
will expire in September 1995. The Partnership anticipates that this
tenant will renew its lease. Because the local office-warehouse leasing
market has been relatively strong, difficulty in releasing any of these
spaces is not anticipated. 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 a long period
although its lease is on a month-to-month basis. While it is not
anticipated, if the expiring lease and 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 June 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.
8
<PAGE>
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 June 30, 1995.
9
<PAGE>
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: August 10, 1995
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Drexel Burnham Lambert Real Estate Associates 1995 Second Quarter 10-QSB
and is qualified in its entirety by reference to such 10-QSB filing.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 295,269
<SECURITIES> 0
<RECEIVABLES> 12,014
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 435,002
<PP&E> 2,929,482
<DEPRECIATION> 1,183,868
<TOTAL-ASSETS> 2,257,570
<CURRENT-LIABILITIES> 56,830
<BONDS> 1,311,437
<COMMON> 0
0
0
<OTHER-SE> 889,303
<TOTAL-LIABILITY-AND-EQUITY> 2,257,570
<SALES> 0
<TOTAL-REVENUES> 188,417
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 179,131
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52,708
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,286
<EPS-PRIMARY> .80
<EPS-DILUTED> 0
</TABLE>
