<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 September 30, 1999
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
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Seaport Plaza, New York, N.Y. 10292-0128
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 214-3500
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 __
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
CONSOLIDATED STATEMENT OF NET ASSETS
(in process of liquidation)
(Unaudited)
<TABLE>
<CAPTION>
September 30,
1999
- ----------------------------------------------------------------------------------------------------
(in thousands,
except for
depository unit
amount)
<S> <C>
ASSETS
Cash and cash equivalents $ 1,956
Interest receivable 19
---------------
Total assets 1,975
---------------
LIABILITIES
Due to affiliates 189
Other liabilities, including estimated liquidation costs 129
---------------
Total liabilities 318
---------------
Net assets available to Unitholders and General Partners $ 1,657
---------------
---------------
Depository units issued and outstanding 68,795
---------------
---------------
</TABLE>
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CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
(in process of liquidation)
(Unaudited)
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNERS TOTAL
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(in thousands)
<S> <C> <C> <C>
Net assets--April 1, 1999 $ 3,199 $ (278) $ 2,921
Gain on sale of properties 16,237 432 16,669
Net income (loss) from liquidating activities 1,118 (35) 1,083
Distributions (18,919) (97) (19,016)
-------------- -------- -------
Net assets--September 30, 1999 $ 1,635 $ 22 $ 1,657
-------------- -------- -------
-------------- -------- -------
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The accompanying notes are an integral part of these statements.
</TABLE>
2
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(going concern basis)
(Unaudited)
<TABLE>
<CAPTION>
December 31,
1998
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(in
thousands)
<S> <C>
ASSETS
Investment in property:
Land $ 10,842
Buildings, improvements and equipment 42,009
Less: Accumulated depreciation (23,587)
Allowance for loss on impairment of assets (500)
------------
Net investment in property 28,764
Cash and cash equivalents 1,896
Prepaid expenses and other assets, net 1,019
------------
Total assets $ 31,679
------------
------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Notes payable $ 26,650
Due to affiliates 635
Accounts payable and accrued liabilities 1,003
Security deposits and deferred revenue 335
Real estate taxes payable 68
------------
Total liabilities 28,691
------------
Partners' capital
Unitholders (68,795 depositary units issued and outstanding) 3,265
General Partners (277)
------------
Total partners' capital 2,988
------------
Total liabilities and partners' capital $ 31,679
------------
------------
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The accompanying notes are an integral part of this statement.
</TABLE>
3
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
CONSOLIDATED STATEMENTS OF OPERATIONS
(going-concern basis)
(Unaudited)
<TABLE>
<CAPTION>
For the
three For the nine For the three
months ended months ended months ended
March 31, September 30, September 30,
1999 1998 1998
- -------------------------------------------------------------------------------------------------------
(in thousands, except
for depositary unit amounts)
<S> <C> <C> <C>
REVENUES
Operating $1,747 $ 5,413 $ 1,790
Recovery of expenses 96 339 114
------------ ------------- -------------
1,843 5,752 1,904
------------ ------------- -------------
EXPENSES
Property operating 717 2,090 791
Interest 570 1,858 626
Depreciation and amortization 590 1,764 590
General and administrative 33 647 95
------------ ------------- -------------
1,910 6,359 2,102
------------ ------------- -------------
Net loss $ (67) $ (607) $ (198)
------------ ------------- -------------
------------ ------------- -------------
ALLOCATION OF NET LOSS
Unitholders $ (66) $ (601) $ (196)
------------ ------------- -------------
------------ ------------- -------------
General Partners $ (1) $ (6) $ (2)
------------ ------------- -------------
------------ ------------- -------------
Net loss per depositary unit $(0.96) $ (8.74) $ (2.85)
------------ ------------- -------------
------------ ------------- -------------
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</TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(going-concern basis)
(Unaudited)
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNERS TOTAL
- ----------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Partners' capital (deficit)--December 31, 1998 $ 3,265 $ (277) $ 2,988
Net loss (66) (1) (67)
-------------- -------- -------
Partners' capital (deficit)--March 31, 1999 $ 3,199 $ (278) $ 2,921
-------------- -------- -------
-------------- -------- -------
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The accompanying notes are an integral part of these statements.
</TABLE>
4
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
CONSOLIDATED STATEMENT OF CASH FLOWS
(going-concern basis)
(Unaudited)
<TABLE>
<CAPTION>
For the nine
months ended
September 30,
1998
<S> <C>
- ---------------------------------------------------------------------------------------------------
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (607)
---------------
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 1,764
Lease concessions-effective rents 42
Leasing commissions paid (74)
Changes in:
Prepaid expenses and other assets, net (110)
Due to affiliates 28
Accounts payable and accrued liabilities 58
Real estate taxes payable 2
---------------
Total adjustments 1,710
---------------
Net cash provided by operating activities 1,103
CASH FLOWS FROM INVESTING ACTIVITIES
Building improvements (296)
---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Loan fees (110)
---------------
Net increase in cash and cash equivalents 697
Cash and cash equivalents at beginning of period 1,106
---------------
Cash and cash equivalents at end of period $ 1,803
---------------
---------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 1,868
---------------
---------------
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The accompanying notes are an integral part of this statement.
</TABLE>
5
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Unaudited)
A. General
As a result of its pending liquidation, the Partnership changed its method of
accounting from the going-concern basis by adopting the liquidation basis of
accounting effective April 1, 1999. Accordingly, the net assets of the
Partnership at September 30, 1999 are stated at liquidation value, whereby the
assets have been valued at their estimated net realizable values and the
liabilities include estimated amounts to be incurred through the date of
liquidation of the Partnership. Additionally, due to the change to the
liquidation basis of accounting on April 1, 1999, the Partnership ceased
depreciating the properties for financial statement purposes only. The actual
remaining net proceeds from liquidation will depend upon a variety of factors
and are likely to differ from the estimated amounts reflected in the
accompanying financial statements. The Partnership intends to liquidate in 1999
after all liabilities have been resolved and distributions have been paid to the
Unitholders. Prior to April 1, 1999, the books and records of the Partnership
were maintained on a going concern accrual basis of accounting.
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 necessary to
present fairly such information subject to the effects of any further
liquidation accounting adjustments that would have been required had the current
realized values of assets and the amounts of liabilities been known when
Prudential-Bache/Equitec Real Estate Partnership, A California Limited
Partnership (the 'Partnership') first adopted the liquidation basis of
accounting as of April 1, 1999.
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, 1998.
Net assets at September 30, 1999 have been adjusted to properly reflect the
allocation of Unitholders' and General Partners' capital in anticipation of
the liquidation of the Partnership.
On July 15, 1999, the Partnership sold its Properties to affiliates of the
Glenborough general partners (the 'Purchaser') for gross proceeds of
$47,145,000. The gross proceeds were reduced by the mortgage debt, as well as
certain credits to the Purchaser. The net sales price was in excess of the
carrying amount of the Properties and resulted in a gain of $16,669,000 for
financial reporting purposes. On August 12, 1999, the Partnership made a
distribution of $275 per unit, representing substantially all of the net
proceeds from the sale of the Properties. Prior to December 31, 1999, the
Partnership expects to distribute any cash remaining after resolving all of its
liabilities and then dissolve.
6
<PAGE>
B. Net Income From Liquidating Activities
Net income from liquidating activities for the six months ended September 30,
1999 consisted of:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Operating revenues and recovery of expenses $ 2,264
--------------
Property operating expenses 904
Interest expense 659
General and administrative expenses
(including estimated liquidation expenses) (382)
--------------
1,181
--------------
Net income from liquidating activities $ 1,083
--------------
--------------
</TABLE>
The credit balance for general and administrative expenses resulted from the
reversal in the six months ended September 30, 1999 of certain overaccruals
regarding the sale of the Partnership's properties and the anticipated
liquidation of the Partnership.
C. 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.
At September 30, 1999 and December 31, 1998, the total liability outstanding
to PBP was $134,000 and $540,000, respectively, and $55,000 and $95,000 due to
Glenborough, respectively.
Included in the balance at September 30, 1999 are costs expected to be
payable to PBP and its affiliates during the anticipated remaining liquidation
period. The actual charges to be incurred by the Partnership may differ from the
amounts accrued as of September 30, 1999.
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, an affiliate of PBP, owns 180 depositary
units at September 30, 1999.
7
<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
On July 15, 1999, the Partnership sold its Properties to affiliates of the
Glenborough general partners (the 'Purchaser') for gross proceeds of
$47,145,000. The gross proceeds were reduced by the mortgage debt, as well as
certain credits to the Purchaser. The net sales price was in excess of the
carrying amount of the Properties and resulted in a gain of $16,669,000 for
financial reporting purposes. On August 12, 1999, the Partnership made a
distribution of $275 per unit, representing substantially all of the net
proceeds from the sale of the Properties. Prior to December 31, 1999, the
Partnership expects to distribute any cash remaining after resolving all of its
liabilities and then dissolve.
Results of Operations
As a result of the Partnership adopting the liquidation basis of accounting
in accordance with generally accepted accounting principles as of April 1, 1999
and thus not reporting results of operations thereafter, there is no management
discussion comparing the corresponding 1999 and 1998 periods.
Year 2000 Risk
As the Partnership is expected to be liquidating in 1999 and will not have
operations in the year 2000, the General Partners do not believe it is
appropriate to include a discussion of the Year 2000 Risk.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
8
<PAGE>
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:
2 Consent Solicitation Statement dated May 28, 1998
filed on the Registrant's Proxy
Statement on Schedule 14A and incorporated
by reference.
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)
10(k) Purchase Agreement, dated as of Effective Date,
by and among the Registrant, Glenborough Realty
Trust Incorporated and Glenborough Properties, L.P.(1)
10(l) Amendment to Purchase Agreement, dated December 19, 1997
by and among the Registrant, Glenborough Realty
Trust Incorporated and Glenborough Properties, L.P.(1)
10(m) Second Amendment to Purchase Agreement, dated
April 27, 1998 by and among the Registrant,
Glenborough Realty Trust Incorporated and Glenborough
Properties, L.P.(1)
10(n) Third Amendment to Purchase Agreement, dated
November 16, 1998 by and among the Registrant,
Glenborough Realty Trust Incorporated and Glenborough
Properties, L.P. (incorporated by reference to the
Registrant's Quarterly Report for the period ended
September 30, 1998 filed on Form 10-Q)
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K--None
---------------
(1) Filed as an exhibit to Registrant's Proxy Statement on
Schedule 14A dated May 28, 1998 and incorporated by reference.
9
<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: November 15, 1999
----------------------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the Registrant
10
<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-31-1999
<PERIOD-START> Jan-1-1999
<PERIOD-END> Sep-30-1999
<PERIOD-TYPE> 9-mos
<CASH> 1,956,000
<SECURITIES> 0
<RECEIVABLES> 19,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,975,000
<CURRENT-LIABILITIES> 318,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,657,000
<TOTAL-LIABILITY-AND-EQUITY> 1,975,000
<SALES> 0
<TOTAL-REVENUES> 0<F1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0<F1>
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0<F1>
<EPS-BASIC> 0<F1>
<EPS-DILUTED> 0
<FN>
<F1>
Registrant adopted the liquidation basis of accounting
on April 1, 1999, and, accordingly, does not reflect
operations subsequent to April 1, 1999. See Note A
to the financial statements for further details.
</FN>
</TABLE>
