FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[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
For the transition period from.........to.........
Commission file number 0-14570
MCCOMBS REALTY PARTNERS, LTD.
(Exact name of small business issuer as specified in its charter)
California 33-0068732
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Check whether the issuer (1) 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 .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) MCCOMBS REALTY PARTNERS, LTD.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands)
March 31, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 525
Restricted--tenant security deposits 27
Accounts receivable 9
Escrow for taxes 22
Restricted escrows 137
Other assets 184
Investment properties:
Land $ 499
Buildings and related personal property 5,123
5,622
Less accumulated depreciation (2,896) 2,726
$ 3,630
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 42
Tenant security deposits 27
Accrued taxes 20
Other liabilities 81
Mortgage note payable 5,818
Partners' Capital (Deficit)
General partners $ 2
Limited partners (22,036 units
issued and outstanding) (2,360) (2,358)
$ 3,630
See Accompanying Notes to Consolidated Financial Statements
b) MCCOMBS REALTY PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for unit data)
Three Months Ended
March 31,
1996 1995
Revenues:
Rental income $ 334 $ 319
Other income 31 19
Total revenues 365 338
Expenses:
Operating 114 94
General and administrative 10 8
Maintenance 60 16
Depreciation 46 40
Interest 162 184
Property taxes 20 35
Total expenses 412 377
Net loss $ (47) $ (39)
Net loss allocated to general partners (1%) $ -- $ --
Net loss allocated to limited partners (99%) (47) (39)
$ (47) $ (39)
Net loss per limited partnership unit $ (2.12) $ (1.77)
See Accompanying Notes to Consolidated Financial Statements
c) MCCOMBS REALTY PARTNERS, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except for unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Partners' capital (deficit)
at December 31, 1995 22,036 $ 2 $ (2,313) $ (2,311)
Net loss for the three
months ended March 31, 1996 -- -- (47) (47)
Partners' capital (deficit)
at March 31, 1996 22,036 $ 2 $ (2,360) $ (2,358)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) MCCOMBS REALTY PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (47) $ (39)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation 46 40
Amortization of discounts and loan costs 5 47
Change in accounts:
Restricted cash -- 4
Accounts receivable 1 (6)
Escrows for taxes (20) --
Other assets -- 1
Accounts payable (133) 12
Tenant security deposit liabilities 3 1
Accrued taxes 20 19
Other liabilities 9 3
Net cash (used in) provided by
operating activities (116) 82
Cash flows from investing activities:
Property improvements and replacements (18) (2)
Deposits to restricted escrows (17) --
Net cash used in investing activities (35) (2)
Cash flows from financing activities:
Payments on mortgage note payable (12) (8)
Net cash used in financing activities (12) (8)
Net (decrease) increase in cash and cash equivalents (163) 72
Cash and cash equivalents at beginning of period 688 212
Cash and cash equivalents at end of period $ 525 $ 284
Supplemental disclosure of cash flow information:
Cash paid for interest $ 118 $ 137
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e) MCCOMBS REALTY PARTNERS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article
310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of the General Partner, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three month
period ended March 31, 1996, are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the annual report on Form 10-KSB for the year ended December
31, 1995, for McCombs Realty Partners, Ltd. ("Partnership").
Note B - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and
its affiliates for the management and administration of all partnership
activities. The Partnership Agreement provides for payments to affiliates for
services and as reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. Property management fees are included in operating
expense on the consolidated statement of operations. Reimbursements for
services from affiliates are included in general and administrative expense in
the consolidated statement of operations. The following transactions with
Insignia Financial Group, Inc. and affiliates were charged to expense in 1996
and 1995:
Three Months Ended
March 31,
1996 1995
Property management fees $ 18 $ 16
Reimbursement for services from affiliates 7 6
The Partnership insures its properties under a master policy through an
agency and insurer unaffiliated with the General Partner. An affiliate of the
General Partner acquired, in the acquisition of a business, certain financial
obligations from an insurance agency which was later acquired by the agent who
placed the current year's master policy. The current agent assumed the
financial obligations to the affiliate of the General Partner, who receives
payments on these obligations from the agent. The amount of the Partnership's
insurance premiums accruing to the benefit of the affiliate of the General
Partner by virtue of the agent's obligations is not significant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment property consists of one apartment complex. The
following table sets forth the average occupancy of the property for the three
month periods ended March 31, 1996 and 1995:
Average
Occupancy
Property 1996 1995
Lakewood at Pelham
Greenville, South Carolina 94% 99%
The General Partner attributes the decrease in occupancy to an increase in
rental rates.
Results of Operations
The Partnership's net loss as shown in the financial statements for the three
months ended March 31, 1996, was approximately $47,000 as compared to net loss
of approximately $39,000 for the corresponding period of 1995. The increase in
net loss for the three months ended March 31, 1996, is primarily attributable to
the increase in maintenance expense which is a result of painting and repairs
performed at the investment property. In addition, the increase in net loss is
due to an increase in operating expenses due to an increase in maintenance
salaries needed to complete the painting and repairs and an increase in
advertising in an attempt to increase the occupancy level at the investment
property. Also increasing the net loss for the three months ended March 31,
1996, is an increase in depreciation expense due to the acquisition of
depreciable assets.
Offsetting the items noted above was a decrease in interest expense due to a
decrease in the interest rate on the mortgage balance during the three months
ended March 31, 1996, resulting from the refinancing in June 1995. Property tax
expense for the three months ended March 31, 1996, decreased as compared to the
three months ended March 31, 1995, due to an underpayment of 1993 taxes that
were paid in the first quarter of 1995.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment property to assess the
feasibility of increasing rents, maintaining or increasing occupancy levels and
protecting the Partnership for increases in expense. As part of this plan the
General Partner attempts to protect the Partnership for the burden of inflation-
related increases in expenses by increasing rents and maintaining a high overall
occupancy level. However, due to changing market conditions, which can result
in the use of rental concessions and rental reductions to offset softening
market conditions, there is no guarantee that the General Partner will be able
to sustain such a plan.
Liquidity and Capital Resources
At March 31, 1996, the Partnership had unrestricted cash of $525,000 versus
$284,000 at March 31, 1995. Net cash used in operating activities increased due
to a decrease in accounts payable, a decrease in the amortization of discounts
and loan costs, and an increase in the escrows for taxes. This increase in net
cash used in operating activities was partially offset by an increase in
depreciation expense and an increase in other liabilities. Net cash used in
investing activities increased as a result of increased purchases of property
improvements and replacements and increased deposits to restricted escrows. Net
cash used in financing activities increased as a result of increased principal
payments on the mortgage note payable due to the reduced interest rate provided
by the debt refinancing of Lakewood at Pelham in June 1995.
The Partnership has no material capital programs scheduled to be performed in
1996, although certain routine capital expenditures and maintenance expenses
have been budgeted. These capital expenditures and maintenance expenses will be
incurred only if cash is available from operations, is received from the capital
reserve account or from cash and cash equivalents on hand.
The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The mortgage
indebtedness of approximately $5,818,000 has a maturity date of June 30, 2005,
at which time the property will be sold or refinanced. Future cash
distributions will depend on the level of net cash generated from operations, a
property sale, and the availability of cash reserves. No cash distributions
were recorded in the first three months of 1996 or 1995 and none are expected
for the remainder of 1996.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K:
None filed during the quarter ended March 31, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MCCOMBS REALTY PARTNERS, LTD.
By: CRPTEX, INC.
the General Partner
By:/s/ Carroll D. Vinson
Carroll D. Vinson
President
By:/s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: May 6, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from McCombs
Realty Partners LTD 1996 First Quarter 10-QSB and is qualified in it's entirety
by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000759198
<NAME> MCCOMBS REALTY PARTNERS LTD
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 525
<SECURITIES> 0
<RECEIVABLES> 9
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 5,622
<DEPRECIATION> 2,896
<TOTAL-ASSETS> 3,630
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 5,818
0
0
<COMMON> 0
<OTHER-SE> (2,358)
<TOTAL-LIABILITY-AND-EQUITY> 3,630
<SALES> 0
<TOTAL-REVENUES> 365
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 412
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 162
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (47)
<EPS-PRIMARY> (2.12)
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
