<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1998 Commission File Number 0-13493
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
-----------------------------------------
(Exact name of small business issuer as specified in its charter)
Massachusetts 04-2833662
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Five Cambridge Center, Cambridge, MA 02142
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
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 [ ]
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the Three Months Ended
March 31, 1998 and 1997 (Unaudited) (Note 1) 1998 1997
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REVENUES:
Interest income .......................... $ 6,352 $ 3,953
EXPENSES:
Interest ................................. 2,163,491 1,963,651
Amortization ............................. 101,157 101,157
Related party management fee ............. 75,000 75,000
General and administrative ............... 5,629 9,549
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2,345,277 2,149,357
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Loss from Operations ............................ (2,338,925) (2,145,404)
Equity in Losses of Operating
Partnerships ............................. (1,786,029) (1,647,512)
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Net Loss ........................................ $(4,124,954) $(3,792,916)
=========== ===========
Net Loss Allocated to General Partners .......... $ (41,250) $ (37,929)
=========== ===========
Net Loss Allocated to Limited Partners .......... $(4,083,704) $(3,754,987)
=========== ===========
Net Loss per Unit of Limited Partnership
Interest ................................. $ (6,806) $ (6,258)
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The accompanying notes are an integral part of these financial statements.
2
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BALANCE SHEETS
March 31, 1998 and December 31, 1997 March 31, December 31,
(Unaudited) 1998 1997
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ASSETS
Deferred financing costs, net of accumulated
amortization of $45,275 and $44,442
respectively ................................... $ 4,725 $ 5,558
Cash and cash equivalents ...................... 212,422 2,012,003
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TOTAL ASSETS ................................... $ 217,147 $ 2,017,561
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LIABILITIES
Purchase Money Note, net of unamortized
discount .................................... $ 60,372,988 $ 58,597,428
Notes payable .................................. 9,873,978 9,873,978
Accrued interest on operating deficit notes .... 19,612,518 19,224,587
Investments in Operating Partnerships .......... 9,467,953 7,581,600
Accrued expenses ............................... 17,188 17,492
Due to affiliate ............................... 1,075,000 2,800,000
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100,419,625 98,095,085
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PARTNERS' DEFICIT:
Limited partners - Units of Limited
Partnership Interest, $96,250 stated
value per unit; authorized, issued
and outstanding - 600 Units ................ (98,674,172) (94,590,468)
General partners ............................... (1,528,306) (1,487,056)
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(100,202,478) (96,077,524)
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TOTAL LIABILITIES AND PARTNERS' DEFICIT ........ $ 217,147 $ 2,017,561
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The accompanying notes are an integral part of these financial statements.
3
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<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
For the Three Months Ended
March 31, 1998 and 1997 (Unaudited) 1998 1997
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<S> <C> <C>
Cash flows from operating activities:
Net loss .................................................. $(4,124,954) $(3,792,916)
Adjustments to reconcile net loss to net cash used
in operating activities:
Amortization .......................................... 101,157 101,157
Equity in losses of Operating Partnerships ............ 1,786,029 1,647,512
Interest added to loan principal on Purchase
Money Note ........................................ 1,775,560 1,575,720
Increase in accrued interest on operating deficit notes 387,931 387,931
Decrease in accrued expenses .......................... (304) --
Decrease in due to affiliate .......................... (1,725,000) (725,000)
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Net cash used in operating activities ................. (1,799,581) (805,596)
Cash and cash equivalents, beginning of period ............ 2,012,003 1,043,786
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Cash and cash equivalents, end of period .................. $ 212,422 $ 238,190
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
<TABLE>
<CAPTION>
Units of
For the Three Months Ended Limited Investor
March 31, 1998 and 1997 Partnership Limited General
(Unaudited) Interest Partners Partners Total
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1997 600 $ (94,590,468) $ (1,487,056) $ (96,077,524)
Net loss ................. -- (4,083,704) (41,250) (4,124,954)
------------- ------------- ------------- -------------
Balance, March 31, 1998 .. 600 $ (98,674,172) $ (1,528,306) $(100,202,478)
============= ============= ============= =============
Balance, December 31, 1996 600 $ (80,708,206) $ (1,346,831) $ (82,055,037)
Net loss ................. -- (3,754,987) (37,929) (3,792,916)
------------- ------------- ------------- -------------
Balance, March 31, 1997 .. 600 $ (84,463,193) $ (1,384,760) $ (85,847,953)
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
(Unaudited)
1. ACCOUNTING AND FINANCIAL REPORTING POLICIES
The condensed financial statements included herein have been prepared by
the Registrant, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. The Registrant's accounting and
financial reporting policies are in conformity with generally accepted
accounting principles and include adjustments in interim periods
considered necessary for a fair presentation of the results of
operations. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations. It is suggested that these condensed
financial statements be read in conjunction with the financial statements
and the notes thereto included in the Registrant's annual report on Form
10-KSB for the period ended December 31, 1997.
The accompanying financial statements reflect the Partnership's results
of operations for an interim period and are not necessarily indicative of
the results of operations for the year ending December 31, 1998.
2. TAX LOSS
The Partnership's taxable loss for 1998 is expected to differ from that
for financial reporting purposes primarily due to accounting differences
in the recognition of depreciation and certain capitalized costs.
3. RELATED PARTY TRANSACTIONS
Expenses for the three months ended March 31, 1998 and 1997 include a
management fee of $75,000 earned by an affiliate of the General Partner.
Aggregate unpaid management fees to the affiliate amounted to $1,075,000
and $2,800,000 at March 31, 1998 and December 31, 1997, respectively. A
payment of $1,800,000 ($1,725,000 of which was applied to past due
amounts) was made to this affiliate during the first three months of
1998.
6
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4. INVESTMENTS IN OPERATING PARTNERSHIPS
The condensed statements of operations of the Operating Partnerships
(presented on a combined basis with all significant inter-partnership
transactions eliminated) are as follows:
Condensed Statements of Operations
Three Months Ended March 31
--------------------------------
1998 1997
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Revenue:
Hotel Operations $13,618,641 $13,380,291
Rental Operations 3,235,093 3,337,407
Other 93,980 104,511
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16,947,714 16,822,209
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Expenses:
Hotel Operations 11,213,245 11,228,242
Rental Operations 2,471,297 2,276,852
Interest 5,934,090 5,780,263
Other 8,035 8,036
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19,626,667 19,293,393
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Net Loss $ (2,678,953) $ (2,471,184)
============= =============
Net Loss Allocated to Twelve AMH
Associates Limited Partnership $ (1,786,029) $ (1,647,512)
============= =============
Net Loss Allocated to Other Partners $ (892,924) $ (823,672)
============= =============
7
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5. SUBSEQUENT EVENT
The Shops LLC was formed to assume the lease with respect to The Shops at
National Place previously held by The Rouse Company. The members of The
Shops are the Partnership (66.67%), Quadrangle (16.665%) and Marriott
(16.665%). Effective April 1, 1998 the Shops LLC began leasing the retail
space under a lease agreement with Square 254. The lease expires on May
15, 2014 with two options to extend (first option for 30 years and second
option until the end of the ground lease, which expires in 2083). The
minimum annual rental consists of Base Rent of $1,368,100 plus Additional
Rent of $202,440. In addition, a Percentage Rent would be due based upon
meeting certain operational criteria.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This Item should be read in conjunction with the financial statements and
other items contained elsewhere in the report.
Liquidity and Capital Resources
The Partnership's only assets consist of cash and its general partnership
interests in Square 254 Limited Partnership ("Square 254"), National Place
Land Limited Partnership ("National Land") and its membership interest in The
Shops LLC ("Shops"). Square 254 and National Land own a multiple-use complex
located in Washington D.C. known as National Place, and the underlying land,
respectively. The Shops, in turn, leases the retail space at the complex (see
Note 4).
The Partnership's primary source of revenue is distributions from Square 254,
the Shops and National Land (collectively, the "Operating Partnerships"). The
Partnership requires cash to pay management fees and general and
administrative expenses and may require cash to satisfy its obligations to
fund any operating deficits of the Operating Partnerships.
The Partnership received no cash distributions from the Operating Partnerships
during either of the three months ended March 31, 1998 or March 31, 1997.
The Partnership's liquidity based on cash and cash equivalents declined from
$2,012,003 at December 31, 1997 to $212,422 at March 31, 1998. This decrease
was primarily the result of a $1,800,000 payment to an affiliate of the
General Partner for accrued management fees (see Note 3).
The Operating Partnerships are not expected to make any future distributions
until December 1998, or later, depending upon property operating results in
1998. The Partnership's current reserves are expected to be sufficient to fund
administrative expenses in the foreseeable future. All future distributions to
the Partnership from the Operating Partnerships will be used to repay the
unpaid asset management fees after payment of administrative expenses of the
Partnership.
Based on the Partnership's current and expected cash flow, the Partnership
will not have sufficient funds to satisfy its existing indebtedness at
maturity in August 1999. Accordingly, if the Partnership cannot refinance or
modify this indebtedness on favorable terms, or sell its interest in the
Operating Partnerships for sufficient value, the Partnership may lose its
interests in the Operating Partnerships through foreclosure. The Managing
General Partner has begun preliminary discussions with The Travelers Insurance
Company in an attempt to restructure these loans and is exploring other
alternatives to refinance or restructure this indebtedness. As a result, at
this time it appears that investors in the Partnership will not receive a
return of a significant portion of their investment.
9
<PAGE>
Results of Operations
Loss from operations increased from $2,145,404 for the three months ended
March 31, 1997 to $2,338,925 for the three months ended March 31, 1998. This
increase is due to increases in Partnership expenses of $195,920, which were
partially offset by an increase in revenues of $2,399. The increase in
expenses resulted from an increase of $199,840 in interest expense on the
loans made to the Partnership to acquire its interests in the Operating
Partnerships. All interest on such loans is accrued and will be due and
payable upon the maturities of such loans. All other expenses remained
relatively constant.
Equity in losses of Operating Partnerships for the three months ended March
31, 1998 increased 8.5% (from $1,647,512 to $1,786,029) as compared to the
three month period ended March 31, 1997. This increase was due to a decline in
the operating results of both Square 254 and National Land. Net operating
income generated by the Hotel portion of the mixed-use complex owned by Square
254 increased by $253,347 for the three months ended March 31, 1998 compared
to the three months ended March 31, 1997, due primarily to an increase in
occupancy. The operating results for the office towers portion of the complex,
however, decreased by $307,290 for the three months ended March 31, 1998,
primarily due to a decrease in retail and parking revenues and an increase in
personnel services, utilities and repairs and maintenance expenses. Operating
results for National Land decreased by $177,645 for the three months ended
March 31, 1998 compared to the three months ended March 31, 1997 primarily as
a result of an increase in interest expense.
10
<PAGE>
PART II - OTHER INFORMATION
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 March 31, 1998.
11
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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.
TWELVE AMH ASSOCIATES
LIMITED PARTNERSHIP
(Registrant)
By: Two Winthrop Properties, Inc.
Managing General Partner
By: /s/ Michael L. Ashner
-------------------------
Michael L. Ashner
Chief Executive Officer
By: /s/ Edward V. Williams
-------------------------
Edward V. Williams
Chief Financial Officer
DATED: May 13, 1998
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from unaudited financial statements for the
three month period ending March 31, 1998 and is
qualified in its entirety by reference to such financial
statements
</LEGEND>
<CIK> 0000748524
<NAME> TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 212,422
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 217,147
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (100,202,478)
<TOTAL-LIABILITY-AND-EQUITY> 217,147
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 176,157
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,163,491
<INCOME-PRETAX> (4,124,954)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,124,954)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,124,954)
<EPS-PRIMARY> (6,806.17)
<EPS-DILUTED> (6,806.17)
</TABLE>
