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
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the quarterly period ended December 31, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period.........to.........
Commission file number 0-13104
MRI BUSINESS PROPERTIES FUND LTD.
(Exact name of small business issuer as specified in its charter)
California 94-2919856
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
Issuer's telephone number
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) MRI BUSINESS PROPERTIES FUND LTD.
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
December 31, 1996
Assets
Cash and cash equivalents $ 4,199
Receivables and other assets 2,219
Investment properties:
Land $ 440
Building and related personal property 4,035
4,475
Less accumulated depreciation 1,762 2,713
Deferred costs, net 22
Total assets $ 9,153
Liabilities and Partners' Equity
Accrued expenses and other liabilities $ 81
Partners' Equity:
General partners' deficit $ (1,010)
Limited partners' equity (82,158 units outstanding) 10,082 9,072
Total liabilities and partners' equity $ 9,153
See Accompanying Notes to Financial Statements
b) MRI BUSINESS PROPERTIES FUND LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
December 31,
1996 1995
Revenues:
Commercial operations $ 168 $ 822
Other income 55 67
Gain on sale of property 858 --
Total revenues 1,081 889
Expenses:
Operating 104 451
Interest 6 25
Depreciation 39 104
General and administrative 82 113
Total expenses 231 693
Net income before extraordinary item 850 196
Extraordinary item:
Loss on extinguishment of debt 94 --
Net income $ 756 $ 196
Net income allocated to general partners $ 153 $ 4
Net income allocated to limited partners 603 192
Net income $ 756 $ 196
Net income per limited partnership unit:
Net income before extraordinary item $ 8.25 $ 2.34
Extraordinary loss on extinguishment of debt (.91) --
Net income per limited partnership unit $ 7.34 $ 2.34
Distribution per limited partnership unit $ 83.50 $ --
See Accompanying Notes to Financial Statements
c) MRI BUSINESS PROPERTIES FUND LTD.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited General Limited
Partnership Partners' Partners' Total
Units Deficit Equity Equity
<S> <C> <C> <C> <C>
Original capital contributions 82,158 $ 100 $ 82,158 $ 82,258
Partners' (deficit) capital at
September 30, 1996 82,158 $ (1,023) $ 16,339 $ 15,316
Distributions paid to partners (140) (6,860) (7,000)
Net income for the three
months ended December 31, 1996 -- 153 603 756
Partners' (deficit) capital at
December 31, 1996 82,158 $ (1,010) $ 10,082 $ 9,072
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
d) MRI BUSINESS PROPERTIES FUND LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
December 31,
1996 1995
Cash flows from operating activities:
Net income $ 756 $ 196
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain on sale of properties (858) --
Extraordinary loss on extinguishment
of debt 94 --
Depreciation and amortization 43 139
Change in accounts:
Receivables and other assets 47 (28)
Deferred cost paid (8) (10)
Accrued expenses and other liabilities (107) 12
Due to affiliate -- (50)
Net cash (used in) provided by operating
activities (33) 259
Cash flows from investing activities:
Net proceeds from sale of property 3,889 --
Property improvements and replacements -- (28)
Net cash provided by (used in) investing
activities 3,889 (28)
Cash flows from financing activities:
Notes payable principal payments -- (11)
Satisfaction of notes payable (1,063) --
Costs paid to extinguish debt (32) --
Distribution to partners (7,000) --
Net cash used in financing activities (8,095) (11)
(Decrease) increase in cash and cash
equivalents (4,239) 220
Cash and cash equivalents at beginning of period 8,438 3,795
Cash and cash equivalents at end of period $ 4,199 $ 4,015
Supplemental information:
Interest paid $ 13 $ 24
See Accompanying Notes to Financial Statements
e)
MRI BUSINESS PROPERTIES FUND LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of MRI Business Properties
Fund Ltd. (the "Partnership") 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 NPI Equity Investments II, Inc. ("NPI Equity" or the "Managing
General Partner"), all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended December 31, 1996, are not necessarily
indicative of the results that may be expected for the fiscal year ending
September 30, 1997. For further information, refer to the financial statements
and footnotes thereto included in the Partnership's annual report on Form 10-K
for the fiscal year ended September 30, 1996.
The statement of operations and statement of cash flow for the three month
period ended December 31, 1995, are consolidated statements which include the
Partnership and a wholly owned subsidiary, Resource Park West, L.P. Resource
Park West, L.P., was dissolved when the investment property Resource Park West
was sold October 22, 1996 (see "Note C").
Certain reclassifications have been made to the fiscal year 1996 information
to conform to the fiscal year 1997 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
The Managing General Partner of the Partnership is Montgomery Realty Company-
83 ("Montgomery"), a California limited partnership of which Fox Realty
Investors ("FRI"), a California general partnership, is the managing general
partner. The associate general partner of the Partnership is MRI Associates,
Ltd., a California limited partnership, of which FRI is the general partner, and
Two Broadway Associates II, an affiliate of Merrill Lynch, Pierce, Fenner &
Smith, Incorporated, is the limited partner.
The Managing General Partner is a wholly owned subsidiary of National
Property Investors, Inc., ("NPI"). Pursuant to a series of transactions which
closed during the first half of calendar year 1996, affiliates of Insignia
Financial Group, Inc. ("Insignia") acquired, among other things, control of NPI
Equity. In connection with these transactions, affiliates of Insignia appointed
new officers and directors of NPI Equity.
The following transactions with affiliates of Insignia, NPI, and affiliates of
NPI were charged to expense in 1996 and 1995:
For the Three Months Ended
December 31,
1996 1995
Reimbursement for services of affiliates (included
in general and administrative expenses) $ 5,000 $ 30,000
For the three month period ended December 31, 1996, the Partnership insured
its properties under a master policy through an agency and insurer unaffiliated
with the Managing General Partner. An affiliate of the Managing General Partner
acquired, in the acquisition of a business, certain financial obligations from
an insurance agency which was later acquired by the agent who placed the current
year's master policy. The current agent assumed the financial obligations to
the affiliate of the Managing General Partner who received payments on these
obligations from the agent. The amount of the Partnership's insurance premiums
accruing to the benefit of the affiliate of the Managing General Partner by
virtue of the agent's obligations is not significant.
NOTE C - GAIN ON SALE OF PROPERTY AND EXTRAORDINARY LOSS ON EXTINGUISHMENT OF
DEBT
On October 22, 1996, the Partnership sold Resource Park West Office Building
to an unrelated third party for a contract amount of $4,025,000. After the
payment of the note payable, closing costs and related expenses of approximately
$136,000, the Partnership received proceeds of approximately $3,889,000. The
sale resulted in a gain of approximately $858,000 in fiscal year 1997. The
early extinguishment of debt resulted in an extraordinary loss of approximately
$94,000, arising from prepayment penalties and the write off of unamortized loan
costs. A provision for impairment of value of $1,640,000 was recorded in fiscal
year 1992.
NOTE D - DISTRIBUTIONS
In October 1996, the Partnership distributed $6,860,000 ($83.50 per limited
partnership unit) to the limited partners and $140,000 to the general partners
from proceeds from the disposition of the Norwood Tower Office Building and
Mardot II Building which occurred during fiscal year 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment property consists of Parkway Village Shopping
Center, located in Atlanta Georgia. The average occupancy for the three month
periods ended December 31, 1996 and 1995, was 50% and 61%, respectively.
The decrease in occupancy at the Parkway Village Shopping Center is the result
of the relocation of an anchor tenant who occupied 41% of the total space,
during the first fiscal quarter of 1997. An additional 4% of the property's
space, consisting of three tenants, was vacated during the first fiscal quarter
as a direct result of the loss of the anchor tenant. At December 31, 1996,
occupancy for the property had declined to 20% as a result of the above
mentioned tenant losses.
The Partnership realized net income of $756,000 and $196,000 for the three
months ended December 31, 1996, and 1995, respectively. The increase in net
income is the result of the gain on sale of the Resource Park West Building,
during the first fiscal quarter of 1997. Additionally, during fiscal 1996, the
Partnership sold three properties, the Norwood Tower Office Building, in June of
1996; the Mardot II Building, in July of 1996; and the Priest Office Building in
September of 1996. Due to the above mentioned property sales, in fiscal 1996
and 1997, the Partnership has seen a significant reduction in interest,
operating, depreciation, and general and administrative expenses as well as a
$94,000 loss on the extinguishment of debt arising from the sale of the Resource
Park West Building.
Revenues at the remaining property, Parkway Village Shopping Center decreased
during the three months ended December 31, 1996 as compared to December 31,
1995. The decrease in revenue was the result of tenant losses discussed above.
This decrease was partially offset by an increase in tenant reimbursements.
Operating expenses at Parkway Village Shopping Center increased for the three
months ended December 31, 1996, as compared to the three months ended December
31, 1995. This increase in operating expenses was due to an increase in real
estate tax expense resulting from a fiscal year 1995 tax appeal being settled in
fiscal year 1996, and the Partnership paying the additional taxes in fiscal year
1996.
At December 31, 1996, the Partnership had unrestricted cash of approximately
$4,199,000 as compared to approximately $4,015,000 at December 31, 1995. Net
cash used in operations decreased due to the decrease in net operating income
from the Partnership's remaining property and the sale of the Partnership's four
properties during fiscal 1996 and the first quarter of fiscal 1997. Net cash
provided by investing activities increased as the result of the proceeds from
the sale of the Resource Park West Building. Net cash used in financing
activities increased as the result of the satisfaction of approximately
$1,063,000 in mortgage indebtedness secured by the Resource Park West Building,
and a distribution of approximately $6,860,000 to the limited partners and
$140,000 to the general partners.
The Partnership's remaining property consists of one shopping center located
in Georgia. The Partnership receives rental income from commercial spaces and
is responsible for operating and administrative expenses. The Partnership is
marketing its remaining property for sale. Although the space occupied by the
anchor tenant became vacant during the first fiscal quarter of 1997, the
Managing General Partner believes, that at this time, it is prudent to continue
to market the property for sale as opposed to expending significant amounts of
cash flow in an effort to fully lease the property. Upon the sale of the
remaining property, it is anticipated that all cash of the Partnership will be
distributed, after establishment of a sufficient reserve, and the Partnership
will be liquidated.
An affiliate of the Managing General Partner has made available to the
Partnership a line of credit of $150,000, per property owned by the Partnership.
As of December 31, 1996, there are no outstanding amounts due under this line of
credit. Based on present plans, the Managing General Partner does not
anticipate the need to borrow in the near future. Other than cash and cash
equivalents, the line of credit is the Partnership's only unused source of
liquidity.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. Future cash
distributions will depend on the levels of cash generated from operations, a
property sale, and the availability of cash reserves. In October 1996, the
Partnership distributed $6,860,000 ($83.50 per limited partnership unit) to the
limited partners and $140,000 to the general partners from proceeds from the
disposition of the Norwood Tower Office Building and Mardot I Building. No
distributions were made during the three month period ended December 31, 1995.
PART II - OTHER INFORMATION
ITEMS 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: Form 8-K was filed by the Partnership, dated
October 22, 1996, relating to the sale of Resource Park West Building.
SIGNATURE
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.
MRI BUSINESS PROPERTIES FUND, LTD.
By: MONTGOMERY REALTY COMPANY 83,
its Managing General Partner
By: FOX REALTY INVESTORS,
its Managing General Partner
By: NPI EQUITY INVESTMENTS, II INC.
its managing general partner
By: /s/ William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
By: /s/ Ronald Uretta
Ronald Uretta
Chief Operating Officer
Date: February 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from MRI Business
Properties Fund Ltd. 1997 First Quarter 10-QSB and is qualified in its entirety
by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000722886
<NAME> MRI BUSINESS PROPERTIES FUND LTD.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-30-1996
<CASH> 4,199
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 4,475
<DEPRECIATION> (1,762)
<TOTAL-ASSETS> 9,153
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,072
<TOTAL-LIABILITY-AND-EQUITY> 9,153
<SALES> 0
<TOTAL-REVENUES> 1,081
<CGS> 0
<TOTAL-COSTS> 231
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> 850
<INCOME-TAX> 0
<INCOME-CONTINUING> 850
<DISCONTINUED> 0
<EXTRAORDINARY> 94
<CHANGES> 0
<NET-INCOME> 756
<EPS-PRIMARY> 7.34<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
