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 February 28, 1997
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: 0-11763
COMMERCIAL PROPERTIES 2, L.P.
Exact Name of Registrant as Specified in its Charter
Virginia 13-3130258
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 February 28, At November 30,
1997 1996
Assets
Real estate, at cost:
Land $ 1,560,092 $ 5,216,878
Buildings and improvements 10,749,643 24,607,258
12,309,735 29,824,136
Less accumulated depreciation (5,586,869) (11,944,782)
6,722,866 17,879,354
Real estate assets held for disposition 10,865,057 --
Cash and cash equivalents 1,778,059 1,739,498
Restricted cash 161,898 166,795
Rent and other receivables, net
of allowance for doubtful accounts
of $7,275 in 1997 and 1996 174,545 134,924
Prepaid expenses, net of
accumulated amortization of $1,215,525
in 1997 and $1,182,166 in 1996 251,523 312,834
Deferred rent receivable 125,422 135,289
Total Assets $20,079,370 $20,368,694
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable and accrued expenses $ 355,412 $ 405,275
Due to affiliates 46,024 42,846
Distribution payable 429,293 429,293
Security deposits payable 157,126 157,126
Total Liabilities 987,855 1,034,540
Partners' Capital (Deficit):
General Partners (235,656) (233,230)
Limited Partners
(100,000 units outstanding) 19,327,171 19,567,384
Total Partners' Capital 19,091,515 19,334,154
Total Liabilities and Partners' Capital $20,079,370 $20,368,694
Consolidated Statement of Partners' Capital (Deficit)
For the three months ended February 28, 1997
General Limited
Partners Partners Total
Balance at November 30, 1996 $(233,230) $19,567,384 $19,334,154
Net income 1,867 184,787 186,654
Distributions (4,293) (425,000) (429,293)
Balance at February 28, 1997 $(235,656) $19,327,171 $19,091,515
Consolidated Statements of Operations
For the three months ended February 28, and February 29, 1997 1996
Income
Rent $934,983 $873,936
Interest 20,900 31,642
Other 10,687 818
Total income 966,570 906,396
Expenses
Property operating 358,935 338,654
Depreciation and amortization 347,015 340,939
General and administrative - other 64,682 37,129
General and administrative - affiliates 9,284 12,034
Total expenses 779,916 728,756
Net Income $186,654 $177,640
Net Income Allocated:
To the General Partners $ 1,867 $ 1,776
To the Limited Partners 184,787 175,864
$186,654 $177,640
Per limited partnership unit
(100,000 outstanding) $1.85 $1.76
Consolidated Statements of Cash Flows
For the three months ended February 28 and February 29, 1997 1996
Cash Flows From Operating Activities:
Net income $186,654 $177,640
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 347,015 340,939
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Restricted cash 4,897 13,266
Rent and other receivables (39,621) (237)
Prepaid expenses 27,952 20,426
Deferred rent receivable 9,867 9,529
Accounts payable and accrued expenses (49,863) 19,823
Due to affiliates 3,178 3,387
Security deposits payable -- 2,623
Net cash provided by operating activities 490,079 587,396
Cash Flows From Investing Activities:
Additions to real estate (22,225) (84,759)
Net cash used for investing activities (22,225) (84,759)
Cash Flows From Financing Activities:
Cash distributions (429,293) (429,293)
Net cash used for financing activities (429,293) (429,293)
Net increase in cash and cash equivalents 38,561 73,344
Cash and cash equivalents, beginning of period 1,739,498 2,461,901
Cash and cash equivalents, end of period $1,778,059 $2,535,245
Supplemental Schedule of Non-Cash Investing Activities:
Write-off fully depreciated building improvements $ 10,666 $ 264,136
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be
read in conjunction with the Partnership's annual 1996 audited
consolidated 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 February 28, 1997 and the results of operations
and cash flows for the three months ended February 28, 1997 and
February 29, 1996 and the statement of partners' capital
(deficit) for the three months ended February 28, 1997. Results
of operations for the period are not necessarily indicative of
the results to be expected for the full year.
Certain prior year amounts have been reclassified in order to
conform to the current year's presentation.
The following significant events have occurred subsequent to
fiscal year 1996 which requires disclosure in this interim report
per Regulation S-X, Rule 10-01, Paragraph (a)(5).
The General Partners have engaged real estate brokers to assist
with the marketing of Swenson Business Park - Building C in San
Jose, California and Maitland Center Office Building C in
Orlando, Florida. The General Partners anticipate that the sale
of these two properties will be completed in 1997. Accordingly,
such properties have been reclassified on the Consolidated
Balance Sheet as "Real estate assets held for disposition".
Part I, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
The General Partners have engaged real estate brokers to assist
with the marketing of Swenson Business Park - Building C in San
Jose, California and Maitland Center Office Building C in
Orlando, Florida. The General Partners anticipate that the sale
of these two properties will be completed in 1997. Accordingly,
such properties have been reclassified on the Consolidated
Balance Sheet as "Real estate assets held for disposition".
The Partnership had cash and cash equivalents at February 28,
1997 of $1,778,059, compared to $1,739,498 at November 30, 1996.
The increase of $38,561 is the result of net cash provided by
operations in the amount of $490,079 less cash distributions
totaling $429,293 and capital expenditures in the amount of
$22,225. The Partnership also had a restricted cash balance of
$161,898 at February 28, 1997 which is primarily comprised of
security deposits. The Partnership expects sufficient cash flow
from operations to be generated from the properties to meet its
future operating requirements.
Rent and other receivables totaled $174,545 at February 28, 1997, compared to
$134,924 at November 30, 1996. The increase is mainly due to the timing of
rental payments at Maitland Center Office Building C and Two Financial Centre.
Prepaid expenses decreased to $251,523 at February 28, 1997 from $312,834 at
November 30, 1996, due to the amortization of leasing commissions and prepaid
insurance.
Accounts payable and accrued expenses totaled $355,412 at
February 28, 1997, compared with $405,275 at November 30, 1996.
The decrease is largely due to the timing of payments for real
estate taxes for all three of the Partnership's properties.
In December 1996, two tenants leasing a total of 16,104 square
feet representing approximately 14% of Two Financial Centre's
leasable area, vacated their spaces upon the scheduled expiration
of their leases. Additionally, a tenant leasing 6,491 square
feet vacated its space in January 1997 upon the expiration of its
lease. As a result, the property was 77% leased at February 28,
1997.
A cash distribution of $4.25 per Unit was declared for the
quarter ended February 28, 1997 and will be paid on or about
April 15, 1997. The distribution will be funded from Partnership
operations and was declared after a review of the Partnership's
1997 anticipated cash needs and its current cash position. The
timing and amount of future cash distributions will be determined
quarterly by the General Partners.
Results of Operations
Partnership operations resulted in net income of $186,654 for the
three months ended February 28, 1997 compared with $177,640 for
the corresponding period in fiscal 1996. The increase in net
income for the 1997 period is primarily attributable to an
increase in rental and other income.
Rental income totaled $934,983 for the three months ended
February 28, 1997, compared to $873,936 for the three months
ended February 29, 1996. The increase is primarily attributable
to higher occupancy at Maitland Center Building C and the timing
of receipt of tenant reimbursable income at Swenson Business Park
- - Building C. Interest income totaled $20,900 for the three
months ended February 28, 1997, compared with $31,642 for the
same period in 1996, due to lower average cash balances in 1997.
Other income totaled $10,687 for the three months ended February
28, 1997, compared to $818 for the three months ended
February 29, 1996, due to the receipt of insurance proceeds in
connection with certain weather-related damage suffered by
Maitland Center Office Building C.
Property operating expenses were $358,935 for the three months
ended February 28, 1997, compared to $338,654 for the three
months ended February 29, 1996. The increase was primarily due
to higher electric utility expenses at Maitland Center Building C
in 1997. General and administrative - other expenses were
$64,682 for the three months ended February 28, 1997, compared to
$37,129 for the three months ended February 29, 1996. The
increase is primarily due to higher costs for Partnership
accounting, tax and investor relations, and higher printing and
postage expenses.
As of February 28, 1997, lease levels at each of the properties
were as follows: Two Financial Centre - 77%; Maitland Center
Office Building C - 100%; and Swenson Business Park - Building C
- - 100%.
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 three months ended February 28, 1997.
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 2, L.P.
BY: Real Estate Services VII, Inc.
General Partner
Date: April 14, 1997 BY: /s/ Rocco F. Andriola
President, Director and
Chief Financial Officer
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<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Nov-30-1997
<PERIOD-END> Feb-28-1997
<CASH> 1,778,059
<SECURITIES> 000
<RECEIVABLES> 174,545
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 23,174,792
<DEPRECIATION> 5,586,869
<TOTAL-ASSETS> 20,079,370
<CURRENT-LIABILITIES> 987,855
<BONDS> 000
<COMMON> 000
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000
<OTHER-SE> 19,091,515
<TOTAL-LIABILITY-AND-EQUITY> 20,079,370
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<TOTAL-REVENUES> 966,570
<CGS> 000
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<OTHER-EXPENSES> 779,916
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<INCOME-TAX> 000
<INCOME-CONTINUING> 186,654
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 186,654
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