<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, 2000 Commission File Number 0-13493
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
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(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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TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited) (Note 1)
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Three Months Ended
March 31,
2000 1999
--------------------------
REVENUES:
Interest income ............................. $ 3,551 $ 6,938
EXPENSES:
Interest .................................... 1,212,931 2,388,676
Amortization ................................ 100,324 101,157
Related party management fee ................ 75,000 75,000
General and administrative .................. 51,400 13,995
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1,439,655 2,578,828
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Loss from Operations ............................. (1,436,104) (2,571,890)
Equity in Losses of Operating Partnerships ....... (2,109,285) (1,730,978)
----------- -----------
Net Loss ......................................... $(3,545,389) $(4,302,868)
=========== ===========
Net Loss Allocated to General Partners ........... $ (35,454) $ (43,029)
=========== ===========
Net Loss Allocated to Limited Partners ........... $(3,509,935) $(4,259,839)
=========== ===========
Net Loss per Unit of Limited Partnership Interest $ (5,850) $ (7,100)
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
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TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
BALANCE SHEETS
(UNAUDITED)
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<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
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<S> <C> <C>
ASSETS:
Cash and cash equivalents ............................... $ 51,318 $ 474,167
Prepaid management fees ................................ 225,000 --
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TOTAL ASSETS ....................................... $ 276,318 $ 474,167
============= =============
LIABILITIES:
Purchase Money Note, plus accrued interest .............. $ 73,424,997 $ 72,599,997
Notes payable ........................................... 9,873,978 9,873,978
Accrued interest on notes payable ....................... 22,715,964 22,328,033
Investments in Operating Partnerships ................... 23,801,025 21,591,416
Due to affiliate ........................................ -- 75,000
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129,815,964 126,468,424
PARTNERS' DEFICIT:
Limited partners - Units of Limited Partnership Interest,
$96,250 stated value per unit; authorized, issued
and outstanding - 600 Units ........................... (127,717,968) (124,208,033)
General partners ........................................ (1,821,678) (1,786,224)
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(129,539,646) (125,994,257)
TOTAL LIABILITIES AND PARTNERS' DEFICIT ................. $ 276,318 $ 474,167
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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TWELVE AMH ASSOCIATE LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
(UNAUDITED)
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Three Months Ended
March 31,
2000 1999
--------------------------
Cash flows from operating activities:
Net loss ......................................... $(3,545,389) $(4,302,868)
Adjustments to reconcile net loss to net cash used
in operating activities:
Amortization .................................. 100,324 101,157
Equity in losses of Operating Partnerships .... 2,109,285 1,730,978
Accrued interest on Purchase
Money Note ................................. 825,000 2,000,744
Increase in accrued interest on notes payable . 387,931
387,931
Increase in accrued expenses .................. -- 1,863
(Decrease) increase in due to affiliate ....... (75,000) 75,000
Increase in prepaid management fee ............ (225,000) --
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Net cash used in operating activities ......... (422,849) (5,195)
Cash and cash equivalents, beginning of period ... 474,167 629,887
----------- -----------
Cash and cash equivalents, end of period ......... $ 51,318 $ 624,692
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The accompanying notes are an integral part of these financial statements.
4
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TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
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<TABLE>
<CAPTION>
Units of
Limited Investor
Partnership Limited General
Interest Partners Partners Total
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1999 600 $(124,208,033) $ (1,786,224) $(125,994,257)
Net loss ................. (3,509,935) (35,454) (3,545,389)
------------- ------------- ------------- -------------
Balance, March 31, 2000 .. 600 $(127,717,968) $ (1,821,678) $(129,539,646)
============= ============= ============= =============
Balance, December 31, 1998 600 $(109,778,909) $ (1,640,475) $(111,419,384)
Net loss ................. (4,259,839) (43,029) (4,302,868)
------------- ------------- ------------- -------------
Balance, March 31, 1999 .. 600 $(114,038,748) $ (1,683,504) $(115,722,252)
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED)
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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, 1999.
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, 2000.
2. RELATED PARTY TRANSACTIONS
Expenses for the three months ended March 31, 2000 and 1999 include a
management fee of $75,000 earned by an affiliate of the General Partner.
As of March 31, 2000, the Partnership had prepaid management fees of
$225,000, while at December 31, 1999 there were unpaid management fees to
the affiliate of $75,000.
3. 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:
6
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TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED)
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Condensed Statements of Operations
Three Months Ended March 31,
----------------------------
2000 1999
------------ ------------
Hotel:
Revenue .......................... $ 13,953,021 $ 13,641,694
Operating expenses ............... (10,717,346) (10,281,488)
Depreciation and amortization .... (1,020,078) (1,020,078)
------------ ------------
Net hotel operations ............... 2,215,597 2,340,128
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Rental:
Revenues ......................... 4,298,804 3,672,683
Operating expenses ............... (1,764,108) (1,653,655)
Depreciation and amortization .... (940,694) (941,093)
------------ ------------
Net rental operations .............. 1,594,002 1,077,935
Interest ........................... (7,091,943) (6,122,020)
Other .............................. 118,528 107,589
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Net loss ........................... $ (3,163,816) $ (2,596,368)
============ ============
Net loss allocated to Twelve AMH
Associates Limited Partnership ... $ (2,109,285) $ (1,730,978)
============ ============
Net loss allocated to others ....... $ (1,054,531) $ (865,390)
============ ============
7
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TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED)
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
This Item should be read in conjunction with the financial statements and
other items contained elsewhere in the report.
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) The discussion of
the Partnership's business and results of operations, including
forward-looking statements pertaining to such matters does not take into
account the effects of any changes to the Partnership's business and
results of operations. Accordingly, actual results could differ materially
from those projected in the forward-looking statements as a result of a
number of factors, including those identified herein.
Liquidity and Capital Resources
At March 31, 2000, the Partnership's only assets consisted of cash and its
general partnership interests in Square 254 Limited Partnership ("Square
254"), National Place Land Limited Partnership ("National Land") and its
company 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.
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, 2000 or
March 31, 1999.
The Partnership's liquidity based on cash and cash equivalents declined
from $474,167 at December 31, 1999 to $51,318 at March 31, 2000. The
decrease in cash and cash equivalents is primarily the result of the
payment of general and administrative expenses of $51,400 and the payment
of management fees of $375,000 including $75,000 of accrued fees from 1999
and $300,000 of fees due for 2000. The Partnership's current reserves are
expected to be sufficient to fund administrative expenses in the
foreseeable future.
8
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TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
previously owned by Square 254
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED)
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Liquidity and Capital Resources (continued)
The Partnership is currently in default under its loan made by Aetna,
which was acquired, from Aetna by the Travelers Casualty and Surety
Company ("Travelers"). This loan is secured by the Partnership's interests
in Square 254, National Land and The Shops. Further, Square 254 is in
default under its existing mortgage loan secured by its assets. In order
to avoid a foreclosure on the Partnerships assets, the Partnership, as
well as the other partners in the Operating Partnerships', finalized a
transaction on May 12, 2000 which provides for, among other things, the
forbearance by the holder of the Traveler's loan of the exercise of any
rights under the Traveler's loan for at least two years and entitles the
Partnership to an approximately $2,800,000 payment in November 2002, as
well as provides for the satisfaction of the Square 254 loans through a
refinancing. Further, it is anticipated that any foreclosure on the
collateral securing the Traveler's loan will not occur until 2003.
Further, the non-Hotel assets previously owned by Square 254 were
transferred to an affiliate of Quadrangle and the Hotel previously owned
by Square 254 was transferred to a newly formed limited partnership (the
"New Hotel Partnership") in which the partners of Square 254, as well as
Host Marriott, LP, received ownership interests, and Square 254 was
dissolved. The Partnership's interest in the New Hotel Partnership secures
its obligations under the Travelers loan, which was acquired by the New
Hotel Partnership. The $2,800,000 payment is not security for the
Traveler's loan. In addition, each of the Operating Partnerships has been
dissolved. As a result, effective May 12, 2000, the Partnership's only
asset is a limited partnership interest in the New Hotel Partnership. With
respect to the loan encumbering the assets of the National Place (the "AEW
Loan"), this loan was bifurcated such that a portion of the debt is
secured by the non-Hotel assets and a portion of the debt is secured by
the Hotel assets. If the transaction had not been consummated, it was
expected that the Partnership would have lost its assets through
foreclosure which would have caused the limited partners to recognize a
gain for tax purposes. In addition to the foregoing, Host Marriott has
been granted an option to acquire the Partnership's interest in the New
Hotel Partnership, which option is exercisable from December 15, 2001
through September 30, 2002 (the "First Option Period") and from January
15, 2003 through June 30, 2003 (the "Second Option Period"). The option
price during the First Option Period is the greater of (a) $5,800,000 plus
the assumption of the Travelers loan or (b) the fair market value of the
interest. The option price during the Second Option Period is the fair
market value of the interest. In connection with the foregoing
transaction, it is anticipated that the Partnership will recognize taxable
income of approximately $38 million or approxmiately $60,000 per unit as a
result of the transfer of the land previously held by National Land.
Results of Operations
Loss from operations decreased from $2,571,890 for the three months ended
March 31, 1999 to $1,436,104 for the three months ended March 31, 2000.
This decrease is due to decreases in Partnership expenses of $1,139,173,
while revenues decreased by only $3,387. The decrease in expenses resulted
primarily from a decrease of $1,175,745 in interest expense on the loans
made to the Partnership to acquire its interests in the Operating
Partnerships. This decrease was partially offset by an increase in general
and administrative expenses of $37,405.
9
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TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED)
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The Operating Partnerships' net loss increased from $2,596,368 for the
three months ended March 31, 1999 to $3,163,816 for the three months ended
March 31, 2000. The increase in net loss is attributable to a decrease in
net Hotel operations and an increase in interest expense, which were only
partially offset by an increase in net rental operations and an increase
in other income. Hotel operations revenue increased by $311,327 for the
three months ended March 31, 2000 as compared to March 31, 1999 as a
result of increased food and beverage sales which were partially offset by
a decrease in room rentals and other Hotel revenue. The increase in Hotel
revenues was more than offset by an increase in Hotel operations expenses
of $435,858 for the same period. The increase in Hotel expenses was due
primarily to an increase in food and beverage costs, insurance, other
taxes and sales expenses which were only partially offset by decreases in
room costs, administrative expenses, repairs and maintenance and
utilities. The increase in interest expense at Square 254 in the result of
a default interest rate being charged on the loan during the forbearance
period. Net rental operations increased due to an increase in rental
revenue of $626,121 which was partially offset by an increase in operating
expenses of $110,453 for the three months ended March 31, 2000 as compared
to the same period ending March 31, 1999. The increase in rental revenues
was due to an increase in office rentals, which was partially offset by a
decrease in retail and parking revenues. Rental operations expenses
increased primarily as a result of increases in legal, management fees,
personnel services and repairs and maintenance.
Operating results for National Land decreased by $222,808 for the three
months ended March 31, 2000 compared to the three months ended March 31,
1999 primarily as a result of an increase in interest expense.
10
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TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
PART II - OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits.
Exhibit 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,
2000.
11
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TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
SIGNATURES
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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/ Thomas C. Staples
-------------------------
Thomas C. Staples
Chief Financial Officer
DATED: May 15, 2000
12
<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, 2000 and is
qualified in its entirety by reference to such financial statements
</LEGEND>
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 51,318
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 276,318
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (129,539,646)
<TOTAL-LIABILITY-AND-EQUITY> 276,318
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 175,324
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,212,931
<INCOME-PRETAX> (3,545,389)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,545,389)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,545,389)
<EPS-BASIC> (5,849.89)
<EPS-DILUTED> (5,849.89)
</TABLE>
