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 May 31, 1995
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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 ATTN: Andre Anderson 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
May 31, November 30,
Assets 1995 1994
- - ---------------- ---------- ----------
Real estate investments, at cost:
Land $ 2,000,000 $ 2,000,000
Buildings and improvements 17,837,203 17,678,184
---------- ----------
19,837,203 19,678,184
Less accumulated depreciation (6,910,057) (6,447,519)
---------- ----------
12,927,146 13,230,665
Cash and cash equivalents 676,195 711,460
Restricted cash 465,579 424,788
Rent receivable, net of allowance for
doubtful accounts of $16,989 in 1994 78,650 67,880
Prepaid expenses, net of accumulated
amortization of $271,379 in 1995 and
$259,614 in 1994 570,950 506,966
Deferred rent receivable 401,862 373,893
Other assets, net of accumulated
amortization of $27,552 in 1995 and
$18,580 in 1994 200,521 209,493
---------- ----------
Total Assets $15,320,903 $15,525,145
========== ==========
Liabilities and Partners' Capital
- - ---------------
Liabilities:
Mortgage notes payable $ 2,831,394 $ 2,899,294
Accrued interest payable -- 18,725
Accounts payable and accrued expenses 344,100 421,279
Due to affiliates 3,709,441 3,600,702
---------- ----------
Total Liabilities 6,884,935 6,940,000
---------- ----------
Partners' Capital (Deficit):
General Partners (141,619) (140,127)
Limited Partners 8,577,587 8,725,272
---------- ----------
Total Partners' Capital 8,435,968 8,585,145
---------- ----------
Total Liabilities and Partners' Capital $15,320,903 $15,525,145
========== ==========
Consolidated Statements of Operations
Three months ended Six months ended
May 31, May 31,
Income 1995 1994 1995 1994
- - --------------- --------- --------- --------- ---------
Rent $ 613,247 $ 736,143 $1,238,156 $1,644,419
Interest 12,950 4,134 24,062 7,386
Other income -- 9,208 -- 9,208
--------- --------- --------- ---------
Total Income 626,197 749,485 1,262,218 1,661,013
--------- --------- --------- ---------
Expenses
- - ---------------
Property operating 302,608 494,604 583,201 964,149
Depreciation and amortization 266,848 394,171 530,794 786,617
Interest 109,069 318,621 216,708 618,153
General and administrative 37,918 29,354 80,692 77,706
Bad debt expense -- -- -- 7,941
--------- --------- --------- ---------
Total Expenses 716,443 1,236,750 1,411,395 2,454,566
--------- --------- --------- ---------
Loss before minority interest (90,246) (487,265) (149,177) (793,553)
Minority interest -- (3,845) -- (10,546)
--------- ---------- --------- ---------
Net Loss $ (90,246) $ (491,110) $ (149,177) $ (804,099)
========= ========= ========= =========
Net Loss Allocated:
To the General Partners $ (903) $ (4,911) $ (1,492) $ (8,041)
To the Limited Partners (89,343) (486,199) (147,685) (796,058)
--------- --------- --------- ---------
$ (90,246) $ (491,110) $ (149,177) $ (804,099)
========= ========= ========= =========
Per limited partnership unit
(56,341 outstanding) $(1.58) $(8.63) $(2.62) $(14.13)
========= ========= ========= =========
Consolidated Statement of Partners' Capital (Deficit)
For the six months ended May 31, 1995
General Limited
Partners Partners Total
---------- ---------- ----------
Balance at November 30, 1994 $ (140,127) $ 8,725,272 $ 8,585,145
Net loss (1,492) (147,685) (149,177)
---------- ---------- ----------
Balance at May 31, 1995 $ (141,619) $ 8,577,587 $ 8,435,968
========== ========== ==========
Consolidated Statements of Cash Flows
For the six months ended May 31, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
- - ------------------------------------ ---------- ----------
Net loss $ (149,177) $ (804,099)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 530,794 786,617
Minority interest -- 10,546
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Restricted cash (40,791) (162,527)
Rent receivable (10,770) 49,769
Prepaid expenses and other assets (123,268) (92,487)
Deferred rent receivable (27,969) (56,272)
Accrued interest payable (18,725) 171,135
Accounts payable and accrued expenses (77,179) 242,259
Due to affiliates 108,739 104,263
---------- ----------
Net cash provided by operating activities 191,654 249,204
---------- ----------
Cash Flows from Investing Activities:
- - ------------------------------------
Additions to real estate (159,019) (129,180)
---------- ----------
Net cash used for investing activities (159,019) (129,180)
---------- ----------
Cash Flows from Financing Activities:
- - ------------------------------------
Mortgage principal payments (67,900) (44,893)
---------- ----------
Net cash used for financing activities (67,900) (44,893)
---------- ----------
Net increase (decrease) in cash and cash equivalents (35,265) 75,131
Cash and cash equivalents at beginning of period 711,460 121,347
---------- ----------
Cash and cash equivalents at end of period $ 676,195 $ 196,478
========== ==========
Supplemental Disclosure of Cash Flow Information:
- - ------------------------------------------------
Cash paid during the period for interest $ 129,768 $ 375,245
========== ==========
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 which are, in the
opinion of management, necessary to present a fair statement of financial
position as of May 31, 1995 and the results of operations for the three and six
months ended May 31, 1995 and 1994, cash flows for the six months ended May 31,
1995 and 1994 and the statement of changes in partners' capital (deficit) for
the six months ended May 31, 1995. Results of operations for the periods are
not necessarily indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1994, 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 May 31, 1995 of $676,195,
compared with $711,460 at November 30, 1994. The decrease of $35,265 is
primarily attributable to real estate additions and mortgage principal payments
exceeding net cash provided by operations. At May 31, 1995, the Partnership
also had a restricted cash balance of $465,579 compared with $424,788 at
November 30, 1994. The restricted cash balance at May 31, 1995 consisted of
$97,523 reserved to fund real estate taxes at Crosswest and $368,056
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,
is expected to provide sufficient liquidity to enable the Partnership to meet
its operating expenses.
Prepaid expenses increased to $570,950 at May 31, 1995 from $506,966 at
November 30, 1994, primarily reflecting differences in the timing of real
estate tax and insurance payments. Accrued interest payable at May 31, 1995
was $0 compared to $18,725 at November 30, 1994. The reduction is due to a
difference in the timing of payments on the mortgage note secured by Crosswest.
Accounts payable and accrued expenses decreased to $344,100 at May 31, 1995
from $421,279 at November 30, 1994, due primarily to lower accrued property
expenses and the timing of payments for building improvements and audit fees.
Results of Operations
- - ---------------------
Partnership operations resulted in net losses of $90,246 and $149,177 for the
three and six months ended May 31, 1995, compared with net losses of $491,110
and $804,099 for the corresponding periods in 1994 of which $161,432 and
$338,275 related to Crosswest, respectively. The lower net losses for the 1995
periods are primarily attributable to the sale of Reflections on November 30,
1994. The lower net losses related to Crosswest are largely due to higher
rental income generated at the property as a result of increased occupancy and
lower property operating expenses in 1995.
Rental income totaled $613,247 and $1,238,156 for the three and six months
ended May 31, 1995, compared with $736,143 and $1,644,419 for the corresponding
periods in 1994. Rental income of $494,230 and $1,017,557 related to Crosswest
for the respective 1994 periods. Higher rental income at Crosswest in 1995 is
due to an increase in occupancy. As of May 31, 1995, Crosswest was 97% leased,
compared with 94% as of May 31, 1994.
Interest income totaled $12,950 and $24,062 for the three and six months ended
May 31, 1995, compared with $4,134 and $7,386 for the corresponding periods in
1994. The increases in 1995 reflect the Partnership's higher average cash
balance and higher interest rates. Other income in 1994 of $9,208 represents a
refund of 1993 real estate taxes for Reflections, resulting from an abatement.
Property operating expenses totaled $302,608 and $583,201 for the three and six
months ended May 31, 1995, compared with $494,604 and $964,149 for the
corresponding periods in 1994. Property operating expenses of $324,961 and
$612,567 related to Crosswest for the respective 1994 periods. The decrease at
Crosswest is largely attributable to lower costs for repairs and maintenance
and professional fees. Depreciation and amortization expense totaled $266,848
and $530,794 for the three and six month periods ended May 31, 1995, compared
with $394,171 and $786,617 for the corresponding periods in 1994. Depreciation
and amortization expense of $281,603 and $505,995 related to Crosswest for the
respective 1994 periods. The increase in the six months period at Crosswest in
1995 is due primarily to tenant improvements completed at the property.
Interest expense totaled $109,069 and $216,708 for the three and six months
ended May 31, 1995, compared with $318,621 and $618,153 for the corresponding
periods in 1994. Interest expense of $93,857 and $187,696 related to Crosswest
for the respective 1994 periods. 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 May 31, 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: July 13, 1995
BY: /s/Kenneth L. Zakin
Name: Kenneth L. Zakin
Title: Director and President
Date: July 13, 1995
BY: /s/William Caulfield
Name: William Caulfield
Title: Vice President and
Chief Financial Officer
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<ARTICLE> 5
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> MAY-31-1995
<CASH> 676,195
<SECURITIES> 000
<RECEIVABLES> 78,650
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 19,837,203
<DEPRECIATION> (6,910,057)
<TOTAL-ASSETS> 15,320,903
<CURRENT-LIABILITIES> 000
<BONDS> 2,831,394
<COMMON> 000
000
000
<OTHER-SE> 8,435,968
<TOTAL-LIABILITY-AND-EQUITY> 15,320,903
<SALES> 000
<TOTAL-REVENUES> 1,262,218
<CGS> 000
<TOTAL-COSTS> 583,201
<OTHER-EXPENSES> 611,486
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 216,708
<INCOME-PRETAX> (149,177)
<INCOME-TAX> 000
<INCOME-CONTINUING> (149,177)
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (149,177)
<EPS-PRIMARY> (2.62)
<EPS-DILUTED> (2.62)
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