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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 MARCH 31, 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 0-13458
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
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PART I - FINANCIAL INFORMATION
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, DECEMBER 31,
1997 1996
ASSETS (UNAUDITED) (AUDITED)
<S> <C> <C>
Property and improvements, at cost:
Land and improvements $ 2,533,388 $ 2,533,388
Buildings 12,003,156 11,983,616
Tenant improvements 3,259,429 3,258,274
--------------- ---------------
17,795,973 17,775,278
Less accumulated depreciation 7,362,741 7,362,741
--------------- ---------------
Net property and improvements 10,433,232 10,412,537
Equity investment in unconsolidated joint venture 2,865,645 2,794,009
Cash and cash equivalents 595,034 595,103
Accounts receivable (net of allowance of $56,594
in 1997 and $27,143 in 1996) 93,305 49,788
Prepaid expenses and other assets 33,020 12,093
Deferred charges, net 502,582 503,416
--------------- ---------------
Total $ 14,522,818 $ 14,366,946
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Accounts payable and accrued expenses (including $50,329
in 1997 and $44,611 in 1996 due to affiliates) $ 234,462 $ 185,114
Tenant security deposits 55,379 66,859
Unearned income 56,676 48,897
--------------- ---------------
Total liabilities 346,517 300,870
--------------- ---------------
Partners' capital (deficit):
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 175,854 172,095
Cumulative cash distributions (177,348) (174,149)
--------------- ---------------
(494) (1,054)
--------------- ---------------
Limited partners (39,236.25 Units):
Capital contributions, net of offering costs 35,602,279 35,602,279
Cumulative net income 4,727,767 4,355,610
Cumulative cash distributions (26,153,251) (25,890,759)
--------------- ---------------
14,176,795 14,067,130
--------------- ---------------
Total partners' capital 14,176,301 14,066,076
--------------- ---------------
Total $ 14,522,818 $ 14,366,946
=============== ===============
The Notes to Financial Statements are an integral part of these statements.
2
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CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
1997 1996
---- ----
<S> <C> <C>
Income:
Base rental income $ 568,522 $ 518,198
Other operating income 58,326 53,763
Interest income 6,926 16,196
------------- -------------
633,774 588,157
------------- -------------
Expenses:
Property operating expenses 215,325 212,287
General and administrative 25,061 23,952
Fees and reimbursements to affiliates 59,657 41,696
Provision for doubtful accounts 29,451 2,354
Depreciation and amortization -- 168,372
------------- -------------
329,494 448,661
------------- -------------
Net partnership operating income 304,280 139,496
Other income:
Equity interest in joint venture net income 71,636 5,487
------------- -------------
Net income $ 375,916 $ 144,983
============= =============
Net income:
General Partner $ 3,759 $ 1,450
Limited partners 372,157 143,533
------------- -------------
$ 375,916 $ 144,983
============= =============
Net income per Unit $ 9.49 $ 3.66
============= =============
Cash distribution per Unit $ 6.69 $ 37.31
============= =============
The Notes to Financial Statements are an integral part of these statements.
3
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CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 375,916 $ 144,983
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred rent credits 834 5,955
Depreciation and amortization -- 168,372
Provision for doubtful accounts 29,451 2,354
Equity interest in joint venture net income (71,636) (5,487)
Accounts receivable (72,968) 81,011
Accounts payable 49,348 99,417
Other, net (24,628) (19,160)
--------------- ---------------
Net cash provided by operating activities 286,317 477,445
--------------- ---------------
Cash flows from investing activities:
Purchases of property and improvements (20,695) (135,365)
Payment of leasing commissions -- (71,225)
--------------- ---------------
Net cash used in investing activities (20,695) (206,590)
--------------- ---------------
Cash flows from financing activities:
Cash distribution to limited partners (262,492) (1,463,905)
Cash distribution to General Partner (3,199) (2,108)
--------------- ---------------
Net cash used in financing activities (265,691) (1,466,013)
--------------- ---------------
Net decrease in cash and cash equivalents (69) (1,195,158)
Cash and cash equivalents, beginning of year 595,103 2,052,475
--------------- ---------------
Cash and cash equivalents, end of period $ 595,034 $ 857,317
=============== ===============
The Notes to 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, 1996 which are included in the
Partnership's 1996 Annual Report, as certain footnote disclosures which would
substantially duplicate those contained in such audited financial statements
have been omitted from this report.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PRESENTATION: The financial statements have been prepared in
conformity 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. All such adjustments are of
a normal recurring nature. Certain amounts in the 1996 financial statements
have been reclassified to conform to the 1997 presentation.
B) CASH AND CASH EQUIVALENTS: Short-term investments with a maturity of three
months or less at the time of purchase are generally reported as cash
equivalents.
C) OTHER ASSETS: At March 31, 1997, other assets included costs related to the
sale of the properties.
2. INVESTMENT PROPERTIES
On December 10, 1996, the Partnership and Glenborough Realty Trust
Incorporated ("Glenborough") executed a letter of intent setting forth an
agreement in principle on the terms and conditions of a sale of all of the
Partnership property and improvements (Lake Point Service Center ("Lake Point"),
Woodlands Plaza Office Building ("Woodlands"), and the Partnership's joint
venture interest in the Westford Corporate Center ("Westford JV")) for an
aggregate purchase price of $14,554,000. On January 10, 1997, the Partnership
and the Glenborough Properties, L.P., an affiliate of Glenborough, entered into
an Agreement of Purchase and Sale (the "Purchase Agreement") incorporating the
terms and conditions of the letter of intent.
On March 25, 1997, the Partnership sent a Consent Solicitation Statement to
Limited Partners requesting consent to the proposed sale, the Purchase Agreement
and the liquidation. The Consent Solicitation Statement expired April 15, 1997,
and the General Partner received the required majority consent. The sale was
completed on April 29, 1997.
After closing costs of approximately $86,800, the Partnership netted
approximately $14,467,200 (Lake Point - $6,442,500, Woodlands - $5,371,000, and
Westford JV interest - $2,653,700). For book purposes, the properties had a
carrying value of approximately $13,490,400 (Lake Point - $6,543,500, Woodlands
- - $4,434,800, and Westford JV interest - $2,512,100) and the Partnership expects
to record a net gain of approximately $976,800 (Lake Point - $(101,000),
Woodlands - $936,200, and Westford JV interest - $141,600). To complete the
liquidation, the net proceeds from the sale together with the net cash from the
transfer of the Partnership's remaining assets to the General Partner, will be
distributed to limited partners on or about June 30, 1997. The Partnership will
terminate concurrently with the liquidating distribution.
3. UNCONSOLIDATED JOINT VENTURE - SUMMARY INFORMATION
The Partnership owns a 26.08% interest in the Westford Office Venture (the
"Venture") which owns the Westford Corporate Center in Westford, Massachusetts.
The general partner of the Partnership's joint venture partner is an affiliate
of the General Partner.
5
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CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
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Venture operations information:
Three Months Ended
March 31,
1997 1996
---- ----
<S> <C> <C>
Total income of venture $ 464,762 $ 418,573
Net income of venture 274,679 21,037
Venture balance sheet information:
March 31, December 31,
1997 1996
Total assets $ 12,011,717 $ 11,712,625
Total liabilities 769,280 744,867
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4. DEFERRED CHARGES
Deferred charges consist of the following:
March 31, December 31,
1997 1996
Deferred leasing commissions $ 1,232,949 $ 1,232,949
Accumulated amortization (738,628) (738,628)
--------------- ----------------
494,321 494,321
Deferred rent credits 8,261 9,095
--------------- ---------------
$ 502,582 $ 503,416
=============== ===============
5. 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 Unpaid at
March 31, March 31,
1997 1996 1997
---- ---- ----
Partnership management fee(a) $ 32,024 $ 14,876 $ 32,024
Property management fee (b)(c) 11,912 12,061 7,802
Reimbursement (at cost) of
out-of-pocket expenses 15,721 14,759 10,503
----------- ----------- ----------
$ 59,657 $ 41,696 $ 50,329
=========== =========== ==========
(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 $3,517 and $3,504 for the three
months ended March 31, 1997 and 1996, respectively.
6
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CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
(c) Does not include on-site property management fees earned by independent
management companies of $24,721 and $25,720 for the three months ended
March 31, 1997 and 1996, 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.
6. SUBSEQUENT EVENT
On May 15, 1997, the Partnership paid the first quarter distribution from
operations of $294,272 to limited partners and $3,238 to the General Partner.
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
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Partnership's cash and cash equivalents and the
Partnership's share of cash and cash equivalents from the Westford Office
Venture totaled $595,034 and $614,497, respectively. The Partnership paid the
first quarter 1997 cash distribution of $294,272 or $7.50 per Unit on May 15,
1997, reflective of the Partnership's adjusted cash from operations for the
three months ended March 31, 1997.
On December 10, 1996, the Partnership and Glenborough Realty Trust
Incorporated ("Glenborough") executed a letter of intent setting forth an
agreement in principle on the terms and conditions of a sale of all of the
Partnership property and improvements (Lake Point Service Center ("Lake Point"),
Woodlands Plaza Office Building ("Woodlands"), and the Partnership's joint
venture interest in the Westford Corporate Center ("Westford JV")) for an
aggregate purchase price of $14,554,000. On January 10, 1997, the Partnership
and the Glenborough Properties, L.P., an affiliate of Glenborough, entered into
an Agreement of Purchase and Sale (the "Purchase Agreement") incorporating the
terms and conditions of the letter of intent.
On March 25, 1997, the Partnership sent a Consent Solicitation Statement to
Limited Partners requesting consent to the proposed sale, the Purchase Agreement
and the liquidation. The Consent Solicitation Statement expired April 15, 1997,
and the General Partner received the required majority consent. The sale was
completed on the April 29, 1997.
After closing costs of approximately $86,800, the Partnership netted
approximately $14,467,200 (Lake Point - $6,442,500, Woodlands - $5,371,000, and
Westford JV interest - $2,653,700). For book purposes, the properties had a
carrying value of approximately $13,490,400 (Lake Point - $6,543,500, Woodlands
- - $4,434,800, and Westford JV interest - $2,512,100) and the Partnership expects
to record a net gain of approximately $976,800 (Lake Point - $(101,000),
Woodlands - $936,200, and Westford JV interest - $141,600). To complete the
liquidation, the net proceeds from the sale together with the net cash from the
transfer of the Partnership's remaining assets to the General Partner, will be
distributed to limited partners on or about June 30, 1997. The Partnership will
terminate concurrently with the liquidating distribution.
RESULTS OF OPERATIONS
Rental income increased for the three months ended March 31, 1997, as
compared with the same period in 1996, primarily due to leasing activity at
Woodlands Plaza. Space occupied by a tenant during the entire first quarter of
1997 was occupied for only a portion of the first quarter 1996. In addition, two
tenants expanded their space in the second quarter of 1996.
Other income increased for the three months ended March 31, 1997, as
compared with the same period in 1996, as the result of an increase in billable
services provided to tenants at Woodlands Plaza.
Interest income decreased for the three months ended March 31, 1997, as
compared with the same period in 1996, due to a lower average cash balance. The
cash balance for a portion of the first quarter of 1996 included proceeds from a
property sale completed in December 1995. The proceeds from the sale were
distributed to limited partners on February 15, 1996.
The increase in fees and reimbursements to affiliates for the three months
ended March 31, 1997, as compared with the same period in 1996, was due to an
increase in partnership management fees. Partnership management fees are
calculated based on adjusted cash from operations. Adjusted cash from operations
for the first quarter of 1996 was lower than 1997
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)
because 1996 had more deductions for capital improvements and leasing costs.
The provision for doubtful accounts increased for the three months ended
March 31, 1997, as compared with the same period in 1996, primarily due to a
tenant problem at Lake Point. A Lake Point tenant assigned its space in late
1996 to one of its affiliate companies without the Partnership's permission and
the Partnership concluded that the tenant was inappropriate for the center. The
"sub-tenant" vacated the space in the first quarter of 1997 and the Partnership
recorded a provision for doubtful accounts for the corresponding outstanding
receivable balance.
Depreciation and amortization expenses were not recorded for the three
months ended March 31, 1997, as the Partnership's properties were held for sale
as of December 1996.
The joint venture net income increased for the three months ended March 31,
1997, as compared with the same period in 1996, primarily as a result of a
decrease in depreciation expense. Depreciation and amortization were not
recorded in 1997 as the property was held for sale. In addition, property
operating expenses were lower in 1997 due to less snow removal and lower
maintenance and utility costs as a result of a milder winter. The first quarter
1996 results were negatively impacted by an adjustment which reduced other
income, as the actual recovery of operating expenses and taxes from tenants for
1995 was lower than estimated.
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OCCUPANCY
The following is a listing of approximate physical occupancy levels by
quarter for the Partnership's investment properties:
1996 1997
------------------------------------------------ ---------
At 3/31 At 6/30 At 9/30 At 12/31 At 3/31
------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
1. Woodlands Plaza II
Office Building
St. Louis, Missouri 95% 99% 99% 99% 99%
2. Lake Point I, II, III
Service Center
Orlando, Florida 100% 100% 100% 100% 89%
3. Westford Corporate Center
Westford, Massachusetts (a) 100% 100% 100% 100% 100%
(a) 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 March 31, 1997.
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: May 14, 1997 By: /s/ John D. Carey
------------ -----------------
John D. Carey, President
(Principal Executive Officer)
Date: May 14, 1997 By: /s/ Josephine C. Donofrio
------------ -------------------------
Josephine C. Donofrio, Controller
(Principal Accounting Officer)
11
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 595034
<SECURITIES> 0
<RECEIVABLES> 149899
<ALLOWANCES> 56594
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 17795973
<DEPRECIATION> 7362741
<TOTAL-ASSETS> 14522818
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14522818
<SALES> 0
<TOTAL-REVENUES> 633774
<CGS> 0
<TOTAL-COSTS> 300043
<OTHER-EXPENSES> (71636)
<LOSS-PROVISION> 29451
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 375916
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 375916
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
