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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 JUNE 30, 1996
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 0-15748
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Connecticut 06-1094176
(State of Organization) (I.R.S. Employer Identification No.)
900 Cottage Grove Road, South Building
Bloomfield, Connecticut 06002
(Address of principal executive offices)
Telephone Number: (860) 726-6000
Indicate by checkmark 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
1
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PART I - FINANCIAL INFORMATION
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
BALANCE SHEETS
<S> <C> <C>
JUNE 30, DECEMBER 31,
1996 1995
ASSETS (UNAUDITED) (AUDITED)
Property and improvements, at cost:
Land and improvements $ 2,533,388 $ 2,533,388
Buildings 11,942,917 11,904,091
Tenant improvements 3,172,623 2,872,782
--------------- ---------------
17,648,928 17,310,261
Less accumulated depreciation 7,068,837 6,783,301
--------------- ---------------
Net property and improvements 10,580,091 10,526,960
Equity investment in unconsolidated joint venture 2,719,145 2,679,392
Cash and cash equivalents 783,227 2,052,475
Accounts receivable (net of allowance of $6,517
in 1996 and $6,535 in 1995) 17,707 107,677
Prepaid expenses and other assets 45,335 27,971
Deferred charges, net 445,231 384,586
--------------- ---------------
Total $ 14,590,736 $ 15,779,061
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Accounts payable and accrued expenses (including $49,632
in 1996 and $32,837 in 1995 due to affiliates) $ 304,123 $ 161,220
Tenant security deposits 86,442 86,457
Unearned income 55,560 61,649
--------------- ---------------
Total liabilities 446,125 309,326
--------------- ---------------
Partners' capital (deficit):
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 168,726 165,478
Cumulative cash distributions (170,752) (167,140)
--------------- ---------------
(1,026) (662)
--------------- ---------------
Limited partners (39,236.25 Units):
Capital contributions, net of offering costs 35,602,279 35,602,279
Cumulative net income 4,022,131 3,700,536
Cumulative cash distributions (25,478,773) (23,832,418)
--------------- ---------------
14,145,637 15,470,397
--------------- ---------------
Total partners' capital 14,144,611 15,469,735
--------------- ---------------
Total $ 14,590,736 $ 15,779,061
=============== ===============
The Notes to Consolidated Financial Statements are an integral part of these statements.
2
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<CAPTION>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------- -------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---- ---- ---- ----
Income:
Base rental income $ 562,918 $ 759,057 $ 1,081,116 $ 1,301,413
Other operating income 30,717 65,915 84,480 114,345
Interest income 8,259 21,111 24,455 28,976
------------- ------------- ------------- -------------
601,894 846,083 1,190,051 1,444,734
------------- ------------- ------------- -------------
Expenses:
Property operating expenses 222,455 247,961 430,162 488,089
General and administrative 18,323 26,701 49,209 72,503
Fees and reimbursements to affiliates 45,662 72,611 87,358 131,693
Depreciation and amortization 169,860 225,809 338,232 413,247
------------- ------------- ------------- -------------
456,300 573,082 904,961 1,105,532
------------- ------------- ------------- -------------
Net partnership operating income 145,594 273,001 285,090 339,202
Gain on sale of property -- 83,399 -- 83,399
Other income:
Equity interest in joint venture net income 34,266 41,994 39,753 84,132
------------- ------------- ------------- -------------
Net income $ 179,860 $ 398,394 $ 324,843 $ 506,733
============= ============= ============= =============
Net income:
General Partner $ 1,798 $ 14,560 $ 3,248 $ 15,643
Limited partners 178,062 383,834 321,595 491,090
------------- ------------- ------------- -------------
$ 179,860 $ 398,394 $ 324,843 $ 506,733
============= ============= ============= =============
Net income per Unit $ 4.54 $ 9.78 $ 8.20 $ 12.51
============= ============= ============= =============
Cash distribution per Unit $ 4.65 $ 5.01 $ 41.96 $ 8.13
============= ============= ============= =============
The Notes to Consolidated Financial Statements are an integral part of these statements.
3
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CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<S> <C> <C>
1996 1995
---- ----
Cash flows from operating activities:
Net income $ 324,843 $ 506,733
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sale of property -- (83,399)
Deferred rent credits 11,910 23,568
Depreciation and amortization 338,232 413,247
Equity interest in joint venture net income (39,753) (84,132)
Accounts receivable 89,970 53,151
Accounts payable 145,470 162,342
Other, net (23,468) 59,417
--------------- ---------------
Net cash provided by operating activities 847,204 1,050,927
--------------- ---------------
Cash flows from investing activities:
Purchases of property and improvements (340,471) (187,462)
Payment of leasing commissions (125,251) (15,979)
Proceeds from sale of property -- 365,400
Payment of closing costs related to sale of property -- (24,372)
Distribution from joint venture -- 521,600
--------------- ---------------
Net cash provided by (used in) investing activities (465,722) 659,187
--------------- ---------------
Cash flows from financing activities:
Cash distribution to limited partners (1,647,118) (319,554)
Cash distribution to General Partner (3,612) (3,554)
--------------- ---------------
Net cash used in financing activities (1,650,730) (323,108)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents (1,269,248) 1,387,006
Cash and cash equivalents, beginning of year 2,052,475 368,015
--------------- ---------------
Cash and cash equivalents, end of period $ 783,227 $ 1,755,021
=============== ===============
The Notes to Consolidated Financial Statements are an integral part of these statements.
4
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CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Readers of this quarterly report should refer to the CONNECTICUT GENERAL
EQUITY PROPERTIES-I LIMITED PARTNERSHIP'S ("the Partnership") audited financial
statements for the year ended December 31, 1995 which are included in the
Partnership's 1995 Annual Report, as certain footnote disclosures which would
substantially duplicate those contained in such audited financial statements
have been omitted from this report.
1. BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PRESENTATION: The accompanying financial statements were prepared
in accordance with generally accepted accounting principles, and reflect
management's estimates and assumptions that affect the reported amounts. It
is the opinion of management that the financial statements presented
reflect all the adjustments necessary for a fair presentation of the
financial condition and results of operations.
B) RECENT ACCOUNTING PRONOUNCEMENT: In 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" (the "Statement"). The Statement requires a
writedown to fair value when long-lived assets to be held and used are
impaired. Long-lived assets to be disposed of, including real estate held
for sale, must be carried at the lower of cost or fair value less costs to
sell. In addition, the Statement prohibits depreciation of long-lived
assets to be disposed. The Partnership adopted this Statement in the first
quarter of 1996; there was no effect on the Partnership's results of
operations, liquidity and financial condition.
C) CASH AND CASH EQUIVALENTS: Short-term investments with a maturity of three
months or less at the time of purchase are reported as cash equivalents.
2. UNCONSOLIDATED JOINT VENTURE - SUMMARY INFORMATION
The Partnership owns a 26.08% interest in the Westford Office Venture which
owns the Westford Corporate Center in Westford, Massachusetts. The remaining
equity interest in the venture is held by CIGNA Income Realty-I Limited
Partnership, an affiliated limited partnership.
<TABLE>
<CAPTION>
Venture operations information:
Three Months Ended Six Months Ended
June 30, June 30,
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---- ---- ---- ----
Total income of venture $ 462,588 $ 475,050 $ 881,161 $ 973,715
Net income of venture 131,390 161,021 152,427 322,593
</TABLE>
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<CAPTION>
Venture balance sheet information:
June 30, December 31,
1996 1995
<S> <C> <C>
Total assets $ 11,427,803 $ 11,280,276
Total liabilities 747,099 751,999
The Venture paid a distribution to the venturers of $2,000,000 in 1995, of
which the Partnership's share was $521,600.
5
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CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
3. DEFERRED CHARGES
Deferred charges consist of the following:
June 30, December 31,
1996 1995
Deferred leasing commissions $ 1,113,639 $ 988,388
Accumulated amortization (680,890) (628,194)
--------------- ----------------
432,749 360,194
Deferred rent credits 12,482 24,392
--------------- ---------------
$ 445,231 $ 384,586
=============== ===============
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<CAPTION>
4. TRANSACTIONS WITH AFFILIATES
Fees and other expenses incurred by the Partnership related to the General
Partner or its affiliates are as follows:
Three Months Ended Six Months Ended Unpaid at
June 30, June 30, June 30,
-------- ------- --------
1996 1995 1996 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Partnership management fee(a) $ 12,644 $ 44,329 $ 27,520 $ 79,476 $ 12,643
Property management fee (b)(c) 11,303 17,646 23,364 30,531 7,853
Reimbursement (at cost) of
out-of-pocket expenses 21,715 10,636 36,474 21,686 29,136
------------ ------------- ----------- ------------ ------------
$ 45,662 $ 72,611 $ 87,358 $ 131,693 $ 49,632
============ ============= =========== ============ ============
</TABLE>
(a) Includes management fees attributable to the Partnership's 26.08% interest
in the Westford Office Venture.
(b) Does not include management fees attributable to the Partnership's 26.08%
interest in the Westford Office Venture of $3,494 and $3,738 for the three
months ended June 30, 1996 and 1995, respectively, and $6,998 and $7,413
for the six months ended June 30, 1996 and 1995, respectively.
(c) Does not include on-site property management fees earned by independent
management companies of $24,039 and $33,246 for the three months ended June
30, 1996 and 1995, respectively, and $49,759 and $59,801 for the six months
ended June 30, 1996 and 1995, respectively. On-site property management
services have been contracted by an affiliate of the General Partner on
behalf of the Partnership and are paid directly by the Partnership to the
third party companies.
5. SUBSEQUENT EVENT
On August 15, 1996, the Partnership paid a distribution of $196,576 to
limited partners and $1,278 to the General Partner.
6
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CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Partnership's cash and cash equivalents and the
Partnership's share of cash and cash equivalents from the Westford Office
Venture totaled $783,227 and $391,762, respectively. The Partnership's cash and
cash equivalents were available for working capital requirements, cash reserves
and distributions to partners. The Partnership paid the first quarter 1996 cash
distribution of $182,451 or $4.65 per Unit on May 15, 1996 and the second
quarter cash distribution of $196,576 or $5.01 per Unit on August 15, 1996. The
cash distributions were representative of each quarter's adjusted cash from
operations, inclusive of adjustments to cash reserves. The Partnership's
distributions from operations for the remainder of the year should reflect
actual operating results subject to changes in reserves for liabilities or
leasing risk.
Lake Point's adjusted cash from operations for the second quarter of 1996
totaled approximately $156,000 after $194,000 of leasing commissions, tenant
improvements, and capital improvements (including utilization of $115,000 of
cash reserves to cover a portion of the second quarter leasing costs). Scheduled
building improvements, budgeted at $68,000, were completed during the quarter at
a total cost of $36,000. Leasing costs to date are also under budget as a result
of lower than expected costs. The 1996 leasing plan included renewals
representing 23,799 square feet and new leases representing 7,565 square feet.
During the first quarter, a new lease representing 2,160 square feet was
executed. During the second quarter, three renewals representing 21,279 square
feet (19,479 square feet planned and 1,800 square feet unplanned) were
completed. Although a tenant vacated 3,605 square feet during the quarter, the
space was immediately absorbed by an existing tenant completing a renewal. The
only additional leasing activity planned for this year is the renewal of a
tenant representing 4,320 square feet. The remaining renewal is anticipated to
be completed by the end of the third quarter. The property was 100% occupied at
June 30, 1996.
Woodlands Plaza generated $18,000 of adjusted cash from operations for the
second quarter of 1996 after approximately $65,000 of leasing costs and an
addition to cash reserves of $43,000. Mosby Yearbook, 14,048 square feet, signed
a lease during December 1995 and took occupancy during February 1996. During the
second quarter, two existing tenants signed leases for 2,252 square feet of
expansion space. Remaining lease expirations during 1996 comprise two tenants
for a total of 16,590 square feet, or 23% of net rentable area. Both tenants are
expected to renew during the third quarter.
At Westford Corporate Center, adjusted cash from operations for the second
quarter was $254,000 ($66,000 attributable to the Partnership's interest). The
property remains 100% occupied. No capital expenditures have been planned for
the year. During the first quarter, a portion of the 1995 capital expenditures
was reimbursed by the tenants. In addition, adjustments were made to reduce
other income (and the portion of account receivable representing 1995 tenant
reimbursement billings) based on the final calculation of actual 1995 tenant
reimbursable operating expenses. As was the case in 1995, the 1996 estimated
billings for tenant expense reimbursement are based on the annual budget.
RESULTS OF OPERATIONS
Generally, decreases in the income statement accounts are the result of the
sales of the remaining buildings of Westside Industrials. Buildings #3, 4 and 5,
sold on December 26, 1995, were fully occupied in the first quarter of 1995.
Building #6, sold on April 27, 1995, was vacant in 1995. For the six months
ended June 30, 1995, Westside Industrials accounted for approximately $101,000
of rental income, $11,000 of other income, $55,000 of property operating
expenses, $12,000 of general and administrative expenses and $23,000 of
depreciation and amortization. For the three months ended June 30,
7
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CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
1995, Westside Industrials accounted for approximately $51,000 of rental income,
$5,000 of other income, $26,000 of property operating expenses, $6,000 of
general and administrative expenses and $10,000 of depreciation and
amortization. The following analytical comments have been limited to the
Partnership's remaining properties.
Rental income decreased for the three and six months ended June 30, 1996,
as compared with the same periods in 1995, as a result of lease termination fees
for Woodlands Plaza totaling $210,000 recorded in the second quarter of 1995.
Exclusive of the lease termination fees, rental income increased at Woodlands
Plaza for the three and six months due to increased occupancy. Rental income at
Lake Point increased approximately $23,000 and $66,000 for the three and six
months, respectively, due to the renewal of a tenant in the fourth quarter of
1995 with new terms, including a higher base rental rate and a lower expense
reimbursement requirement, and the timing of tenant occupancies during the first
quarter of 1995 versus 1996.
The decrease in other income for the three and six months ended June 30,
1996, as compared with the same periods of 1995, was primarily the result of
lower expense charge-back billings at Woodlands Plaza due to a decreased
property tax assessment coupled with a refund of a prior year expense
reimbursement overpayment.
Interest income decreased for the three and six months ended June 30, 1996,
as compared with the same periods of 1995, due to a lower average cash balance.
The average cash balance was higher for the second quarter of 1995 due to the
sale of building #6 at Westside and the distribution received from Westford
Office Venture.
Property operating expenses remained flat for the three and six months
ended June 30, 1996. Lower property taxes at Woodlands Plaza due to a decreased
assessment and a refund for 1995 was offset by higher cleaning and utility
expenses at Lake Point.
The decrease in general and administrative for the six months ended June
30, 1996, as compared with the same period of 1995, was the result of a net
decrease in the provision for doubtful accounts coupled with a nonrecurring
appraisal fee for Woodlands Plaza in 1995.
The decrease in fees and reimbursements to affiliates for the three and six
months ended June 30, 1996, as compared with the same periods of 1995, was due
to a decrease in partnership management fees as a result of a drop in adjusted
cash from operations. Adjusted cash from operations was impacted by a higher
level of capital improvements and leasing costs in 1996.
Depreciation and amortization decreased for the three and six months ended
June 30, 1996, as compared with the same periods in 1995, due primarily to
accelerated depreciation and amortization of assets associated with vacated
tenants at Woodlands Plaza in 1995. Partially offsetting the decrease was an
increase in depreciation and amortization at Lake Point due to new tenant
improvements and leasing commissions incurred during the second quarter of 1995.
The gain on sale was the result of the sale of building #6 of the Westside
property in April 1995.
The joint venture net income decreased for the three and six months ended
June 30, 1996, as compared with the same periods in 1995. Revenue declined as
the result of a lower base rental rate for the replacement tenant of a tenant
that vacated in December 1995. In the first quarter of 1996, an adjustment was
made that reduced other income, as the actual recovery of operating expenses and
taxes from tenants for 1995 was lower than estimated. Property operating
expenses
8
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CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
increased due to an HVAC project and higher snow removal costs as a result of a
harsh winter. In addition, a landscaping project that was previously capitalized
was reclassed to an expense account.
OCCUPANCY
The following is a listing of approximate physical occupancy levels by
quarter for the Partnership's investment properties:
<TABLE>
<CAPTION>
1995 1996
------------------------------------------------ ----------------------
<S> <C> <C> <C> <C> <C> <C>
At 3/31 At 6/30 At 9/30 At 12/31 At 3/31 At 6/30
1. Woodlands Plaza II
Office Building
St. Louis, Missouri 94% 90% 79% 75% 95% 99%
2. Westside Industrials
(formerly Interpark)
Phoenix, Arizona (a) 80% 100% 100% N/A N/A N/A
3. Lake Point I, II, III
Service Center
Orlando, Florida 100% 100% 100% 98% 100% 100%
4. Westford Corporate Center
Westford, Massachusetts (b) 100% 100% 100% 100% 100% 100%
An "N/A" indicates the property was not owned by the Partnership at the end
of the quarter.
</TABLE>
(a) On April 27, 1995, Westside Industrials sold building #6, reducing square
footage from 63,080 to 50,480. The remaining three buildings were sold on
December 26, 1995.
(b) The partnership owns a 26.08% interest in the Westford Office Venture which
owns the Westford Corporate Center.
9
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CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedules
(b) No Form 8-Ks were filed during the three months ended June 30, 1996.
10
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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.
CONNECTICUT GENERAL EQUITY PROPERTIES-I
LIMITED PARTNERSHIP
By: Connecticut General Realty Resources, Inc. - Third,
General Partner
Date: August 8, 1996 By: /s/ John D. Carey
-------------- -----------------
John D. Carey, President and Controller
(Principal Executive Officer)
(Principal Accounting Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> 6-MOS
<CASH> 783227
<SECURITIES> 0
<RECEIVABLES> 24224
<ALLOWANCES> (6517)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 17648928
<DEPRECIATION> 7068837
<TOTAL-ASSETS> 14590736
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14590736
<SALES> 0
<TOTAL-REVENUES> 1190051
<CGS> 0
<TOTAL-COSTS> 566729
<OTHER-EXPENSES> 298479
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 324843
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 324843
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
