UNITED STATES 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 February 28, 1995
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: 0-14342
HUTTON/GSH COMMERCIAL PROPERTIES 4
(Exact name of registrant as specified in its charter)
Virginia 11-2711361
--------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 World Financial Center, 29th Floor, New York, NY 10285
- - -------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(212) 526-3237
---------------------------
(Registrant's telephone number, including area code)
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
Consolidated Balance Sheets
February 28, November 30,
Assets 1995 1994
Real estate investments, at cost:
Land $ 2,000,000 $ 2,000,000
Building and improvements 17,814,048 17,678,184
---------- ----------
19,814,048 19,678,184
Less- accumulated depreciation (6,677,645) (6,447,519)
13,136,403 13,230,665
Cash and cash equivalents 877,343 711,460
Restricted cash 298,122 424,788
Rent receivable, net of allowance for doubtful
accounts of $16,989 in 1994 79,045 67,880
Prepaid expenses, net of accumulated amortization
of $241,429 in 1995 and $259,614 in 1994 510,077 506,966
Deferred rent receivable 390,788 373,893
Other assets, net of accumulated amortization of
$23,066 in 1995 and $18,580 in 1994 205,007 209,493
---------- ----------
Total Assets $15,496,785 $15,525,145
========== ==========
Liabilities and Partners' Capital
Liabilities:
Mortgage note payable $ 2,860,869 $ 2,899,294
Accrued interest payable -- 18,725
Accounts payable and accrued expenses 474,405 421,279
Due to affiliates 3,635,297 3,600,702
---------- ----------
Total Liabilities 6,970,571 6,940,000
Partners' Capital (Deficit):
General Partners (140,716) (140,127)
Limited Partners 8,666,930 8,725,272
---------- ----------
Total Partners' Capital 8,526,214 8,585,145
---------- ----------
Total Liabilities and Partners' Capital $15,496,785 $15,525,145
========== ==========
See accompanying notes to the consolidated financial statements.
Consolidated Statements of Operations
For the three months ended February 28, 1995 and 1994
Income 1995 1994
- - ----------------- ---------- ----------
Rent $ 624,909 $ 908,276
Interest 11,112 3,252
---------- ----------
Total Income 636,021 911,528
Expenses
- - -----------------
Property operating 280,593 469,545
Depreciation and amortization 263,946 392,446
Interest 107,639 299,532
General and administrative 42,774 48,352
Bad debt expense -- 7,941
--------- ---------
Total Expenses 694,952 1,217,816
Loss before minority interest (58,931) (306,288)
Minority interest -- (6,701)
--------- ---------
Net Loss $ (58,931) $ (312,989)
Net Loss Allocated:
To the General Partners $ (589) $ (3,130)
To the Limited Partners (58,342) (309,859)
--------- ---------
$ (58,931) $ (312,989)
========= =========
Per limited partnership unit
(56,341 outstanding) $(1.04) $(5.50)
========= =========
Consolidated Statement of Partners' Capital (Deficit)
For the three months ended February 28, 1995
General Limited
Partners Partners Total
--------- --------- ---------
Balance at November 30, 1994 $ (140,127) $8,725,272 $8,585,145
Net loss (589) (58,342) (58,931)
--------- --------- ---------
Balance at February 28, 1995 $ (140,716) $8,666,930 $8,526,214
See accompanying notes to the consolidated financial statements.
Consolidated Statements of Cash Flows
For the three months ended February 28, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
---------- ----------
Net loss $ (58,931) $ (312,989)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 263,946 392,446
Minority interest -- 6,701
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Restricted cash 126,666 (192,327)
Rent receivable (11,165) 18,068
Prepaid expenses and other assets (32,445) 79,815
Deferred rent receivable (16,895) (60,445)
Accrued interest payable (18,725) 85,480
Accounts payable and accrued expenses 53,126 37,941
Due to affiliates 34,595 55,148
---------- ----------
Net cash provided by operating activities 340,172 109,838
---------- ----------
Cash Flows from Investing Activities:
Additions to real estate (135,864) --
---------- ----------
Net cash used for investing activities (135,864) --
---------- ----------
Cash Flows from Financing Activities:
Mortgage principal payments (38,425) (17,784)
---------- ----------
Net cash used for financing activities (38,425) (17,784)
Net increase in cash and cash equivalents 165,883 92,054
Cash and cash equivalents at beginning of period 711,460 121,347
---------- ----------
Cash and cash equivalents at end of period $ 877,343 $ 213,401
========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 74,529 $ 178,166
========== ==========
See accompanying notes to the consolidated financial statements.
Notes to Consolidated Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments consisting of only
normal recurring accruals which are, in the opinion of management, necessary to
present a fair statement of financial position as of February 28, 1995 and the
results of operations, changes in partners' capital (deficit), and cash flows
for the three months then ended. Results of operations for the period are not
necessarily indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1994, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
Since the full amount of units offered was not sold, insufficient funds were
raised to meet the Partnership's commitments with respect to the acquisition
and lease-up of the properties. In order to meet these commitments, the
General Partners have postponed reimbursements of certain fees and expenses.
Funds made available by deferring payment of the acquisition fee at Reflections
at Deerwood Center ("Reflections") have been fully distributed to the Limited
Partners as cash distributions. Cash flow from operations is currently being
utilized to make payments on the principal balance of the mortgage secured by
Crosswest Office Center ("Crosswest") or held in escrow to fund future mortgage
payments. As a result, cash distributions are not currently being paid to
investors and no further cash distributions will be made until the Partnership
is generating sufficient cash flow in excess of these requirements.
On November 30, 1994, Reflections was sold and proceeds from the sale, after
payment of Reflections' outstanding mortgage balance and closing costs, were
added to the Partnership's cash reserves.
The Partnership had cash and cash equivalents at February 28, 1995 of $877,343,
compared with $711,460 at November 30, 1994. The increase of $165,883 is
primarily attributable to an increase in net cash provided by operations which
was partially offset by real estate additions and mortgage principal payments.
At February 28, 1995, the Partnership also had a restricted cash balance of
$298,122 compared with $424,788 at November 30, 1994. The restricted cash
balance at February 28, 1995 consisted of $230,557 reserved to fund real estate
taxes at Crosswest and $67,565 representing the building lockbox escrow which
was set up during the fourth quarter of 1993, pursuant to Crosswest's amended
loan agreement. The Partnership's cash balance, along with funds generated by
operating activities, are expected to provide sufficient liquidity to enable
the Partnership to meet its operating expenses.
Accrued interest payable at February 28, 1995 was $0 compared to $18,725 at
November 30, 1994 due to the timing of payments on the mortgage note secured by
Crosswest. Accounts payable and accrued expenses increased to $474,405 at
February 28, 1995 from $421,279 at November 30, 1994, due primarily to the
timing of real estate tax payments, tenant and building improvements, and other
liabilities.
Results of Operations
Partnership operations resulted in a net loss of $58,931 for the three months
ended February 28, 1995, compared with a net loss of $312,989 for the three
months ended February 28, 1994, of which $176,843 related to Crosswest. The
lower net loss for the 1995 period is primarily attributable to the sale of
Reflections on November 30, 1994. The lower net loss related to Crosswest is
largely due to higher rental income generated at the property as a result of
higher occupancy.
Rental income totaled $624,909 and $908,276 for the three months ended February
28, 1995 and 1994, respectively. Of the $908,276 for the comparable 1994
period, $523,327 related to Crosswest. Higher rental income at Crosswest in
1995 is due to an increase in occupancy. As of February 28, 1995, Crosswest
was 97% leased, compared to 87% as of February 28, 1994.
Interest income totaled $11,112 and $3,252 for the three months ended February
28, 1995 and 1994, respectively. The increase for the three months ended
February 28, 1995 reflects the Partnership's higher cash balance for the 1995
period and higher interest rates.
Property operating expenses totaled $280,593 for the three months ended
February 28, 1995, compared with $469,545 for the three months ended February
28, 1994, of which $287,606 related to Crosswest. The decrease at Crosswest is
largely attributable to lower costs for repairs and maintenance and capital
expenses, offset partially by higher real estate taxes, insurance, payroll, and
management fees. Depreciation and amortization expense totaled $263,946 for
the three months ended February 28, 1995, compared with $392,446 for the three
months ended February 28, 1994, of which $224,392 related to Crosswest. The
increase at Crosswest in 1995 is due primarily to tenant improvements completed
at the property. Interest expense totaled $107,639 for the three months ended
February 28, 1995, and $299,532 for the three months ended February 28, 1994,
of which $93,839 related to Crosswest. The increase in 1995 is largely due to
higher accrued interest on amounts owed to affiliates, resulting from higher
prevailing interest rates in 1995. The Partnership recognized bad debt expense
of $7,941 for the three months ended February 28, 1994, related to the
write-off of rent from a former tenant at Crosswest.
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the three month period covered by this report.
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, thereunto duly authorized.
HUTTON/GSH COMMERCIAL PROPERTIES 4
BY: CP4 REAL ESTATE SERVICES INC.
General Partner
Date: April 13, 1995
BY: /s/Kenneth L. Zakin
Name: Kenneth L. Zakin
Title: Director and President
Date: April 13, 1995
BY: /s/William Caulfield
Name: William Caulfield
Title: Vice President and
Chief Financial Officer
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