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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, 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
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(Exact name of Registrant as specified in its charter)
California 94-2949474
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Seaport Plaza, New York, N.Y. 10292-0116
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 214-1016
N/A
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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 __
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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>
March 31, December 31,
1996 1995
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(in thousands)
<S> <C> <C>
ASSETS
Investment in property:
Land $ 10,870 $ 10,870
Buildings, improvements and equipment 39,873 39,735
Less: Accumulated depreciation (18,392 ) (17,905)
Allowance for loss on impairment of assets (500 ) (500)
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Net investment in property 31,851 32,200
Cash and cash equivalents 1,163 806
Prepaid expenses and other assets, net 1,291 1,382
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Total assets $ 34,305 $ 34,388
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Notes payable $ 26,580 $ 26,621
Due to affiliates 702 700
Accounts payable and accrued liabilities 504 291
Security deposits and deferred revenue 241 232
Real estate taxes payable 107 73
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Total liabilities 28,134 27,917
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Partners' capital
Unitholders (68,795 depositary units issued and outstanding) 6,417 6,714
General partners (246 ) (243)
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Total partners' capital 6,171 6,471
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Total liabilities and partners' capital $ 34,305 $ 34,388
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</TABLE>
The accompanying notes are an integral part of these statements
2
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PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the For the
three three
months ended months ended
March 31, March 31,
1996 1995
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(in thousands,
except for depositary
unit amounts)
<S> <C> <C>
REVENUES
Operating $1,510 $1,535
Recovery of expenses 120 128
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1,630 1,663
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EXPENSES
Property operating 704 684
Interest 609 580
Depreciation and amortization 543 495
General and administrative 74 141
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1,930 1,900
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Net loss $ (300) $ (237)
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ALLOCATION OF NET LOSS
Unitholders $ (297) $ (235)
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General partners $ (3) $ (2)
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Net loss per depositary unit $(4.32) $(3.42)
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</TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNERS TOTAL
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(in thousands)
<C> <C> <C>
Partners' capital (deficit)--December 31, 1995 $ 6,714 $ (243) $6,471
Net loss (297) (3) (300)
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Partners' capital (deficit)--March 31, 1996 $ 6,417 $ (246) $6,171
----------- -------- ------
----------- -------- ------
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</TABLE>
The accompanying notes are an integral part of these statements
3
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PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the For the
three three
months ended months ended
March 31, March 31,
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (300) $ (237)
------------ ------------
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 543 495
Lease concessions-effective rents (95) 20
Leasing commissions paid (26) (9)
Changes in:
Prepaid expenses and other assets 156 10
Due to affiliates 2 (69)
Accounts payable and accrued liabilities 213 55
Security deposits and deferred revenue 9 --
Real estate taxes payable 34 18
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Total adjustments 836 520
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Net cash provided by operating activities 536 283
CASH FLOWS FROM INVESTING ACTIVITIES
Building improvements (138) (80)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes (41) (65)
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Net increase in cash and cash equivalents 357 138
Cash and cash equivalents at beginning of period 806 1,118
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Cash and cash equivalents at end of period $1,163 $1,256
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 470 $ 721
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</TABLE>
The accompanying notes are an integral part of these statements
4
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PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 March 31, 1996, and the results
of its operations and its cash flows for the three months ended March 31, 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>
Three months Three months
ended ended
March 31, 1996 March 31, 1995
<S> <C> <C>
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(in thousands)
PBP and affiliates:
General and administrative $ 28 $ 33
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Glenborough and affiliates:
Property management fee and expenses 160 149
Leasing commissions 11 6
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171 155
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$199 $188
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</TABLE>
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PBP is not being paid on a current basis for general and administrative
expenses other than printing costs. During the three months ended March 31,
1996, PBP was reimbursed approximately $23,000 which was applied to prior years'
general and administrative expenses due. At March 31, 1996 and December 31,
1995, the total liability outstanding to PBP was approximately $702,000 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 March 31, 1996.
5
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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 $536,000 for the three
months ended March 31, 1996 reduced by $41,000 of principal payments on notes.
During the three months ended March 31, 1996, the Partnership disbursed
approximately $138,000 for building and tenant improvements, primarily related
to the Poplar Towers 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 $1,163,000 at March 31, 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 $23,000 was made in the first quarter of 1996. At March 31, 1996,
the total liability outstanding (including printing) was approximately $702,000.
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. 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 $63,000 for the three
months ended March 31, 1996 as compared to the corresponding period in 1995 for
the reasons discussed below.
Property operating revenues decreased by approximately $25,000 for the three
months ended March 31, 1996 as compared to the corresponding period in 1995 as
increases in Poplar Towers, Gateway and Park Plaza were more than offset by the
decreases at the Montrose and Totem Valley properties. The changes in operating
revenues were primarily the result of corresponding changes in average
occupancies.
Recovery of expenses decreased by approximately $8,000 for the three months
ended March 31, 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 and decreases in various other expense recoveries at the
Gateway, Park Plaza, and Poplar Towers properties.
Property operating expenses increased by $20,000 for the three months ended
March 31, 1996 as compared to the corresponding period in 1995 due primarily to
increase maintenance charges and management fees at the Poplar Towers resulting
from an increase in occupancy and rental rates.
Depreciation and amortization increased by approximately $48,000 for the
three months ended March 31, 1996 as compared to the corresponding period in
1995 due to increased building and tenant improvement additions.
General and administrative expenses decreased by approximately $67,000 for
the three months ended March 31, 1996 as compared to 1995 primarily due to
professional fees in 1995 which were not previously accrued.
Interest expense increased by approximately $29,000 for the three months
ended March 31, 1996 as compared to the corresponding period in 1995 because of
increases in interest rates on variable rate notes.
6
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PART II. OTHER INFORMATION
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
7
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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, 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: May 14, 1996
Eugene D. Burak
Vice President
Chief Accounting Officer for the Registrant
8
<TABLE> <S> <C>
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<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> Mar-31-1996
<PERIOD-TYPE> 3-Mos
<CASH> 1,163,000
<SECURITIES> 0
<RECEIVABLES> 1,291,000
<ALLOWANCES> 500,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 50,743,000
<DEPRECIATION> 18,392,000
<TOTAL-ASSETS> 34,305,000
<CURRENT-LIABILITIES> 28,134,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,171,000
<TOTAL-LIABILITY-AND-EQUITY> 34,305,000
<SALES> 0
<TOTAL-REVENUES> 1,630,000
<CGS> 0
<TOTAL-COSTS> 1,321,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 609,000
<INCOME-PRETAX> (300,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (300,000)
<EPS-PRIMARY> (4.32)
<EPS-DILUTED> 0
</TABLE>
