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 September 30, 1995
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 0-14578
HCW PENSION REAL ESTATE FUND LIMITED PARTNERSHIP
(Exact name of small business issuer as specified in its charter)
Massachusetts 04-2825863
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) 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 .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) HCW PENSION REAL ESTATE FUND LIMITED PARTNERSHIP
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1995
<S>
Assets <C> <C>
Cash and cash equivalents
Unrestricted $ 1,355,882
Restricted--tenant security deposits 168,579
Accounts receivable 144,121
Escrows for taxes 138,317
Other assets 13,268
Land $ 1,120,655
Building and related personal property 13,019,282
14,139,937
Less accumulated depreciation (3,551,016) 10,588,921
$12,409,088
Liabilities and Partners' Capital (Deficit)
Accounts payable $ 54,650
Tenant security deposits 168,579
Accrued taxes 294,109
Other liabilities 149,133
Partners' Capital (Deficit)
General partners $ (44,997)
Limited partners (15,698 units
issued and outstanding) 11,787,614 11,742,617
$12,409,088
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
b) HCW PENSION REAL ESTATE FUND LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $693,247 $637,444 $2,141,689 $1,799,344
Other income 35,057 18,381 111,910 47,157
Total revenues 728,304 655,825 2,253,599 1,846,501
Expenses:
Operating 225,323 210,923 685,990 624,820
General and administrative 73,167 43,225 245,459 190,233
Property management fees 34,658 30,135 122,761 94,871
Maintenance 124,630 140,589 339,258 306,223
Depreciation 148,578 143,013 431,885 422,445
Property taxes 97,933 96,824 280,801 289,739
Tenant reimbursements (28,071) (71,969) (78,302) (145,576)
Total expenses 676,218 592,740 2,027,852 1,782,755
Casualty loss -- -- (25,325) --
Net income $ 52,086 $ 63,085 $ 200,422 $ 63,746
Net income allocated
to general partners (2%) $ 1,041 $ 1,262 $ 4,008 $ 1,275
Net income allocated
to limited partners (98%) 51,045 61,823 196,414 62,471
$ 52,086 $ 63,085 $ 200,422 $ 63,746
Net income per limited
partnership unit $ 3.25 $ 3.94 $ 12.52 $ 3.98
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
c) HCW PENSION REAL ESTATE FUND LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital
contributions 15,698 $ 200 $15,698,000 $15,698,200
Partners' capital (deficit)
at December 31, 1994 15,698 $(49,005) $11,591,200 $11,542,195
Net income for the nine months
ended September 30, 1995 -- 4,008 196,414 200,422
Partners' capital (deficit)
at September 30, 1995 15,698 $(44,997) $11,787,614 $11,742,617
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
d) HCW PENSION REAL ESTATE FUND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 200,422 $ 63,746
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 431,885 422,445
Amortization of leasing commissions 2,960 7,313
Casualty loss 25,325 --
Change in accounts:
Restricted cash (2,226) (30,838)
Accounts receivable 5,373 (178,340)
Escrows for taxes (84,061) (158,113)
Other assets 9,242 97,761
Accounts payable (45,930) 16,490
Tenant security deposit liabilities 2,226 40,307
Accrued taxes 45,962 53,408
Other liabilities 31,357 73,328
Net cash provided by
operating activities 622,535 407,507
Cash flows from investing activities:
Property improvements and replacements (349,719) (44,433)
Cash invested in short-term investments (610,716) --
Cash received from matured investments 1,113,686 --
Insurance proceeds from property damage 237,140 --
Net cash provided by (used in)
investing activities 390,391 (44,433)
Net increase in cash 1,012,926 363,074
Cash at beginning of period 342,956 113,305
Cash at end of period $1,355,882 $ 476,379
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
Supplemental Disclosure of Non-Cash Activity
Investment property and accumulated depreciation were adjusted by $275,659 and
$91,058 in connection with ice damage to the roofs and interiors of two
buildings at Lewis Park Apartments. The property damage resulted in a loss of
$25,325, arising from proceeds receivable from the insurance carrier of $181,040
which were less than the basis of the property plus expenses to replace the
roofs and interiors damaged.
[FN]
See Accompanying Notes to Financial Statements
e) HCW PENSION REAL ESTATE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - 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 nine month period
ended September 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 year ended December 31,
1994.
Certain reclassifications have been made to the 1994 information to
conform to the 1995 presentation.
Note B Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the 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 following payments were made to Insignia Financial Group, Inc. and its
affiliates for the nine months ended September 30, 1995 and 1994.
For the Nine Months Ended
September 30,
1995 1994
Property management fees $122,761 $49,363
Asset management fees 126,669 45,075
Reimbursement for services of affiliates 86,374 48,258
Note B - Transactions with Affiliated Parties - continued
The following payments were made to Hampton Realty Partners, L.P. and its
affiliates for the nine months ended September 30, 1994.
For the Nine Months Ended
September 30, 1994
Property management fees $ 45,508
Asset management fees 50,000
Reimbursement for services of affiliates 44,000
The Partnership insures its properties under a master policy through an
agency and insurer unaffiliated with the General Partner. An affiliate of the
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 General Partner, who receives
payments on these obligations from the agent. The amount of the partnership's
insurance premiums accruing to the benefit of the affiliate of the General
Partner by virtue of the agent's obligations is not significant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of one apartment complex
and one office building. The following table sets forth the average occupancy
of the properties for the quarters ended September 30, 1995 and 1994:
Average
Occupancy
Property 1995 1994
Lewis Park Apartments 75% 54%
Carbondale, Illinois
Highland Professional Tower 95% 96%
Kansas City, Missouri
The General Partner attributes the increase in occupancy at Lewis Park to
aggressive leasing and marketing efforts.
The Partnership's net income for the nine months ended September 30, 1995
was $200,422 versus $63,746 for the corresponding period of 1994. The
Partnership recorded net income for the three months ended September 30, 1995
and 1994 of $52,086 and $63,085, respectively. The increase in net income is
primarily attributable to increased rental revenue and other income due to the
significant increase in occupancy at Lewis Park as previously mentioned.
Partially offsetting the increase in net income was an increase in operating
expense, an increase in general and administrative expense, an increase in
property management fees, an increase in maintenance expense, and a decrease in
tenant reimbursements. Operating expense increased due to additional tenant
concessions necessary in 1995 to increase occupancy at Lewis Park. General and
administrative expense increased due to increased asset management fees which
are calculated as a percentage of the tangible asset value of the Partnership.
Property management fees increased as a result of increased rental revenue at
Lewis Park. Tenant reimbursements decreased due to decreased occupancy at
Highlands Professional Tower along with a decline in reimbursable expenses.
Maintenance expense increased at Lewis Park due to interior painting and other
interior upgrades combined with increased lawn maintenance and landscaping costs
incurred to increase the property's curb appeal. Maintenance expense for the
three months ended September 30, 1995, decreased due to the completion of
repairs during prior quarters.
During the first nine months of 1995, the Partnership recorded a casualty
loss resulting from ice damage to the roofs and interiors of two buildings at
Lewis Park Apartments. Although the damage was covered by insurance, the damage
resulted in a loss of $25,325, arising from proceeds receivable from the
insurance carrier of $181,040 which were less than the basis of the property
plus expenses to replace the roofs and interiors damaged.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.
At September 30, 1995, the Partnership had unrestricted cash of $1,355,882
compared to $476,379 at September 30, 1994. Net cash provided by operating
activities increased primarily as a result of a decrease in accounts receivable
and an increase in income in 1995 as previously discussed. Net cash provided by
investing activities increased due to short-term investments maturing in 1995
along with the receipt of insurance proceeds during the first nine months of
1995 which related to the casualty loss at Lewis Park. The short-term
investments that matured were reinvested in financial instruments of less than
90 days resulting in classification as cash equivalents. The increase was
offset by increased capital improvements as compared to 1994. The General
Partner is considering alternative capital improvement projects to improve
Highland Professional Tower to attract and retain tenants.
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 net cash generated from operations,
capital expenditure requirements, property sales, financings, and the
availability of cash reserves. No cash distributions were made during the first
nine months of 1995 or 1994.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits: 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 September
30, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
HCW PENSION REAL ESTATE FUND
LIMITED PARTNERSHIP
By: HCW General Partner Ltd.,
the General Partner
By: IH, Inc.,
the General Partner
By:/s/ Carroll D. Vinson
Carroll D. Vinson
President
By:/s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: November 8, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from HCW Pension
Real Estate Fund 1995 Third Quarter 10-QSB and is qualified in its entirety by
reference to such 10-QSB.
</LEGEND>
<CIK> 0000745538
<NAME> HCW PENSION REAL ESTATE FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,355,882
<SECURITIES> 0
<RECEIVABLES> 144,121
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 14,139,937
<DEPRECIATION> 3,551,016
<TOTAL-ASSETS> 12,409,088
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 11,742,617
<TOTAL-LIABILITY-AND-EQUITY> 12,409,088
<SALES> 0
<TOTAL-REVENUES> 2,253,599
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,027,852
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 200,422
<EPS-PRIMARY> 12.51
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
