<PAGE>
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
Commission file number: 0-14271
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP, A California Limited
Partnership
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
California 94-2949474
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
One Seaport Plaza, New York, N.Y. 10292-0116
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 214-1016
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check CK 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 _CK_ No __
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
ASSETS
Investment in property:
Land $ 10,870 $ 10,870
Buildings, improvements and equipment 39,947 39,735
Less: Accumulated depreciation (18,813 ) (17,905)
Allowance for loss on impairment of assets (500 ) (500)
--------- ------------
Net investment in property 31,504 32,200
Cash and cash equivalents 1,092 806
Prepaid expenses and other assets, net 1,319 1,382
--------- ------------
Total assets $ 33,915 $ 34,388
--------- ------------
--------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Notes payable $ 26,518 $ 26,621
Due to affiliates 703 700
Accounts payable and accrued liabilities 372 291
Security deposits and deferred revenue 280 232
Real estate taxes payable 90 73
--------- ------------
Total liabilities 27,963 27,917
--------- ------------
Partners' capital
Unitholders (68,795 depositary units issued and outstanding) 6,200 6,714
General partners (248 ) (243)
--------- ------------
Total partners' capital 5,952 6,471
--------- ------------
Total liabilities and partners' capital $ 33,915 $ 34,388
--------- ------------
--------- ------------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
2
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the six months ended For the three months ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------
(in thousands, except for depositary unit amounts)
<S> <C> <C> <C> <C>
REVENUES
Operating $3,055 $3,092 $1,545 $1,557
Recovery of expenses 215 243 95 115
------------ ------------ ------------ ------------
3,270 3,335 1,640 1,672
------------ ------------ ------------ ------------
EXPENSES
Property operating 1,401 1,375 697 691
Interest 1,216 1,185 607 605
Depreciation and amortization 1,029 960 486 465
General and administrative 143 236 69 95
------------ ------------ ------------ ------------
3,789 3,756 1,859 1,856
------------ ------------ ------------ ------------
Net loss $ (519) $ (421) $ (219) $ (184)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
ALLOCATION OF NET LOSS
Unitholders $ (514) $ (417) $ (217) $ (182)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
General partners $ (5) $ (4) $ (2) $ (2)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net loss per depositary unit $(7.47) $(6.06) $(3.15) $(2.65)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNERS TOTAL
- ---------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Partners' capital (deficit)--December 31, 1995 $6,714 $ (243) $6,471
Net loss (514) (5) (519)
-------------- -------- ------
Partners' capital (deficit)--June 30, 1996 $6,200 $ (248) $5,952
-------------- -------- ------
-------------- -------- ------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
3
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the six For the six
months ended months ended
June 30, June 30,
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (519) $ (421)
------------ ------------
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 1,029 960
Lease concessions-effective rents 42 37
Leasing commissions paid (96) (21)
Changes in:
Prepaid expenses and other assets, net (4) 39
Due to affiliates 3 (47)
Accounts payable and accrued liabilities 81 (22)
Security deposits and deferred revenue 48 1
Real estate taxes payable 17 (38)
------------ ------------
Total adjustments 1,120 909
------------ ------------
Net cash provided by operating activities 601 488
CASH FLOWS FROM INVESTING ACTIVITIES
Building improvements (212) (115)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes (103) (122)
------------ ------------
Net increase in cash and cash equivalents 286 251
Cash and cash equivalents at beginning of period 806 1,118
------------ ------------
Cash and cash equivalents at end of period $1,092 $1,369
------------ ------------
------------ ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $1,078 $1,322
------------ ------------
------------ ------------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
4
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
A. General
These financial statements have been prepared without audit. In the opinion
of Prudential-Bache Properties, Inc. (``PBP'') and Glenborough Corporation and
Robert Batinovich (together, ``Glenborough'') (collectively, the ``General
Partners''), the financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the financial
position of Prudential-Bache/Equitec Real Estate Partnership, A California
Limited Partnership (the ``Partnership'') as of June 30, 1996, and the results
of its operations for the six and three months ended June 30, 1996 and 1995 and
its cash flows for the six months ended June 30, 1996 and 1995. However, the
operating results for the interim periods may not be indicative of the results
expected for the full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1995.
B. Related Parties
The General Partners and their affiliates perform services for the
Partnership which include, but are not limited to: accounting and financial
management; registrar, transfer and assignment functions; property management;
investor communications; printing and other administrative services. The General
Partners and their affiliates receive reimbursements for costs incurred in
connection with these services, the amount of which is limited by the provisions
of the Partnership Agreement. The costs and expenses were:
<TABLE>
<CAPTION>
Six months Six months
ended ended
June 30, 1996 June 30, 1995
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
(in thousands)
PBP and affiliates:
General and administrative $ 53 $ 38
------ ------
Glenborough and affiliates:
Property management fee and expenses 292 319
Leasing commissions 63 13
------ ------
355 332
------ ------
$ 408 $ 370
------ ------
------ ------
</TABLE>
<TABLE>
<CAPTION>
Three months Three months
ended ended
June 30, 1996 June 30, 1995
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
(in thousands)
PBP and affiliates:
General and administrative $ 25 $ 5
------ ------
Glenborough and affiliates:
Property management fee and expenses 132 170
Leasing commissions 52 7
------ ------
184 177
------ ------
$ 209 $ 182
------ ------
------ ------
</TABLE>
5
<PAGE>
<PAGE>
PBP is not being paid on a current basis for general and administrative
expenses other than printing costs. During the six and three months ended June
30, 1996, PBP was reimbursed approximately $48,000 and $25,000, respectively,
which was applied to prior years' general and administrative expenses due. At
June 30, 1996 and December 31, 1995, the total liability outstanding to PBP was
approximately $703,000 and $700,000, respectively.
The Partnership maintains an account with the Prudential Institutional
Liquidity Portfolio Fund, an affiliate of PBP, for investment of its available
cash in short-term instruments pursuant to the guidelines established by the
Partnership Agreement.
Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owns 180
depositary units at June 30, 1996.
6
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership generated cash from operations of $601,000 for the six months
ended June 30, 1996 reduced by $103,000 of principal payments on notes. During
the six months ended June 30, 1996, the Partnership disbursed approximately
$212,000 for building and tenant improvements, primarily related to the Poplar
Towers, Montrose and Totem Valley properties. In order to keep the properties
competitive, building and tenant improvements will continue to be required.
The Partnership had cash of approximately $1,092,000 at June 30, 1996. PBP is
not being reimbursed for its general and administrative expenses (other than
printing) on a current basis; however, a payment for past due amounts of
approximately $25,000 was made in the second quarter of 1996. At June 30, 1996,
the total liability outstanding (including printing) was approximately $703,000.
Cash on hand plus any cash generated from operations may not be sufficient to
fund building and tenant improvements and to pay deferred general and
administrative expenses.
The Partnership has continued discussions with the lender to extend the
maturity date and lower the interest rate of the Poplar Tower note that has a
balloon payment due in October 1996. No assurance can be given that the
Partnership will be successful in obtaining an extension or in refinancing the
note.
The General Partners continue to evaluate all of the properties' prospects
for eventual sale. The properties were appraised in November 1995 by a third
party to be approximately $34,900,000 which exceed the Partnerhsip's total net
investment in these properties. However, it is unlikely that investors will be
returned a significant portion of their original investment upon the sale of the
properties and ultimate dissolution of the Partnership.
Results of Operations
The Partnership's net loss increased by approximately $98,000 and $35,000 for
the six and three months ended June 30, 1996 as compared to the corresponding
period in 1995 for the reasons discussed below.
Property operating revenues decreased by approximately $37,000 and $12,000
for the six and three months ended June 30, 1996 as compared to the
corresponding period in 1995 as increases in Poplar Towers, Gateway, Park Plaza,
and Totem Valley were more than offset by the decrease at the Montrose property.
The changes in operating revenues were primarily the result of corresponding
changes in average occupancies with the Montrose property experiencing a
decrease in average occupancy to 83% for the six months ended June 30, 1996 from
99% for the six months ended June 30, 1995 as a result of a major tenant
vacating space.
Recovery of expenses decreased by approximately $28,000 and $20,000 for the
six and three months ended June 30, 1996 as compared to the corresponding period
in 1995 primarily due to lower tenant recoveries from heating, cooling, and
ventilation charges at the Montrose property partially offset by increases in
various other expense recoveries at the Totem Valley property.
Property operating expenses increased by $26,000 and $6,000 for the six and
three months ended June 30, 1996 as compared to the corresponding period in 1995
primarily due to increased maintenance charges at Poplar Towers resulting from
an increase in occupancy rates.
Depreciation and amortization increased by approximately $69,000 and $21,000
for the six and three months ended June 30, 1996 as compared to the
corresponding period in 1995 due to increased building and tenant improvement
additions.
General and administrative expenses decreased by approximately $93,000 and
$26,000 for the six and three months ended June 30, 1996 as compared to 1995
primarily due to professional fees in 1995 which were not previously accrued.
Interest expense increased by approximately $31,000 and $2,000 for the six
and three months ended June 30, 1996 as compared to the corresponding period in
1995 because of increases in interest rates on variable rate notes.
7
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
<TABLE>
<S> <C>
Item 1. Legal Proceedings--None
Item 2. Changes in Securities--None
Item 3. Defaults Upon Senior Securities--None
Item 4. Submission of Matters to a Vote of Security Holders--None
Item 5. Other Information--None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3 and 4 Amended and Restated Limited Partnership Agreement of Registrant dated February 11,
1985 (incorporated by reference to Amendment No. 1 to the Registrant's Form S-11
Registration Statement filed on February 14, 1985) and Amendment No. 1 thereto dated
April 18, 1985 (incorporated by reference to Form 8-A filed on February 28, 1986), as
amended on March 25, 1994 (incorporated by reference to Registrant's 1994 Annual
Report on Form 10-K)
Amended and Restated Agreement between General Partners dated December 28, 1990
(incorporated by reference to the Registrant's 1990 Annual Report filed on Form 10-K)
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K--None
</TABLE>
8
<PAGE>
<PAGE>
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, hereunto duly authorized.
Prudential-Bache/Equitec Real Estate Partnership,
A California Limited Partnership
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Eugene D. Burak Date: August 14, 1996
-----------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the Registrant
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for Prudential-Bache Equitec Real Estate
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000757191
<NAME> Prudential-Bache Equitec Real Estate
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-1-1996
<PERIOD-END> Jun-30-1996
<PERIOD-TYPE> 6-Mos
<CASH> 1,092,000
<SECURITIES> 0
<RECEIVABLES> 1,319,000
<ALLOWANCES> 500,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 50,817,000
<DEPRECIATION> 18,813,000
<TOTAL-ASSETS> 33,915,000
<CURRENT-LIABILITIES> 27,963,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,952,000
<TOTAL-LIABILITY-AND-EQUITY> 33,915,000
<SALES> 0
<TOTAL-REVENUES> 3,270,000
<CGS> 0
<TOTAL-COSTS> 2,573,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,216,000
<INCOME-PRETAX> (519,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (519,000)
<EPS-PRIMARY> (7.47)
<EPS-DILUTED> 0
</TABLE>