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 29, 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: 0-14342
COMMERCIAL PROPERTIES 4, L.P.
----------------------------------------------------
Exact Name of Registrant as Specified in its Charter
Virginia
---------- 11-2711361
State or Other Jurisdiction of ------------
Incorporation or Organization I.R.S. Employer 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 At February 29, At November 30,
- - - --------------------------- 1996 1995
Assets
Real estate, at cost:
Land $ 2,000,000 $ 2,000,000
Building and improvements 17,998,366 18,027,287
19,998,366 20,027,287
Less accumulated depreciation (7,618,165) (7,380,618)
12,380,201 12,646,669
Cash and cash equivalents 737,875 859,541
Restricted cash 1,117,846 769,775
Rent receivable 109,587 90,685
Prepaid expenses, net of accumulated
amortization of $330,727 in 1996 and
$330,548 in 1995 451,413 449,064
Deferred rent receivable 396,795 401,144
Other assets, net of accumulated amortization
of $41,009 in 1996 and $36,523 in 1995 195,690 200,176
Total Assets $ 15,389,407 $ 15,417,054
Liabilities and Partners' Capital (Deficit)
Liabilities:
Mortgage note payable $ 2,749,953 $ 2,780,986
Accrued interest payable 17,760 17,961
Accounts payable and accrued expenses 419,973 423,101
Due to affiliates 3,914,649 3,844,167
Total Liabilities 7,102,335 7,066,215
Partners' Capital (Deficit):
General Partners (133,993) (135,482)
Limited Partners (56,341 units outstanding) 8,421,065 8,486,321
Total Partners' Capital 8,287,072 8,350,839
Total Liabilities and Partners' Capital $ 15,389,407 $ 15,417,054
Consolidated Statement of Partners' Capital (deficit)
- - - -----------------------------------------------------
For the three months ended General Limited
February 29, 1996 Partners Partners Total
Balance at November 30, 1995 $ (135,482) $ 8,486,321 $ 8,350,839
Net income (loss) 1,489 (65,256) (63,767)
Balance at February 29, 1996 $ (133,993) $ 8,421,065 $ 8,287,072
Consolidated statements of Operations
- - - -------------------------------------
For the three months ended February 29,
and February 28, 1996 1995
Income
Rental $ 662,147 $ 624,909
Interest 18,419 11,112
Total income 680,566 636,021
Expenses
Property operating 321,391 280,593
Depreciation and amortization 276,480 263,946
Interest expense 105,987 107,639
General and administrative 40,475 42,774
Total expenses 744,333 694,952
Net Loss $ (63,767) $ (58,931)
Net Income (Loss) Allocated:
To the General Partners $ 1,489 $ (589)
To the Limited Partners (65,256) (58,342)
$ (63,767) $ (58,931)
Per limited partnership unit
(56,341 outstanding) $(1.16) $(1.04)
Consolidated Statements of Cash Flows
- - - -------------------------------------
For the three months ended February 29,
and February 28, 1996 1995
Cash Flows From Operating Activities
Net loss $ (63,767) $ (58,931)
Adjustments to reconcile net loss to net
cash provided by (used for) operating activities:
Depreciation and amortization 276,480 263,946
Increase (decrease) in cash arising from
changes in operating assets and liabilities
Restricted cash (348,071) 126,666
Rent receivable (18,902) (11,165)
Prepaid expenses and other assets (32,973) (32,445)
Deferred rent receivable 4,349 (16,895)
Accrued interest payable (201) (18,725)
Accounts payable and accrued expenses (7,268) 53,126
Due to affiliates 70,482 34,595
Net cash provided by (used for) operating
activities (119,871) 340,172
Cash Flows From Investing Activities
Tenant reimbursements for improvements 36,390 -
Additions to real estate (7,152) (135,864)
Net cash provided by (used for) investing
activities 29,238 (135,864)
Cash Flows From Financing Activities
Mortgage principal payments (31,033) (38,425)
Net cash used for investing activities (31,033) (38,425)
Net increase (decrease) in cash and cash
equivalents (121,666) 165,883
Cash and cash equivalents, beginning of period 859,541 711,460
Cash and cash equivalents, end of period $ 737,875 $ 877,343
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 53,682 $ 74,529
Supplemental Disclosure of Non-Cash Investing
Activities
Tenant improvements funded through accounts
payable $ 4,140 $ -
Write-off of fully depreciated tenant
improvements $ 3,823 $ -
Notes to the Consolidated Financial Statements
- - - ----------------------------------------------
The unaudited financial statements should be read in conjunction with the
Partnership's annual 1995 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 February 29, 1996 and the results of operations and cash flows
for the three months ended February 29, 1996 and 1995 and the statement of
changes in partner's capital (deficit) for the three months ended February 29,
1996. 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 1995, 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 29, 1996 of $737,875,
compared with $859,541 at November 30, 1995. The decrease is primarily
attributable to the transfer of excess cash to the building lockbox escrow
account which was set up during the fourth quarter of 1993, pursuant to
Crosswest's amended loan agreement. At February 29, 1996, the Partnership also
had a restricted cash balance of $1,117,846 compared with $769,775 at November
30, 1995. The increase reflects the transfer of excess cash into the building
lockbox escrow. The restricted cash balance at February 29, 1995 consisted of
$137,416 reserved to fund real estate taxes at Crosswest and $980,430
representing the building lockbox escrow. 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.
Results of Operations
- - - ---------------------
Partnership operations resulted in a net loss of $63,767 for the three months
ended February 29, 1996, compared with a net loss of $58,931 for the three
months ended February 28, 1995. The slightly higher loss for the 1996 period
is primarily attributable to an increase in property operating expenses,
partially offset by higher rental and interest income.
Rental income totaled $662,147 and $624,909 for the three months ended February
29, 1996 and February 28, 1995, respectively. The higher rental income in 1996
is largely due to an increase in base rent resulting from higher occupancy and
increased rental rates. Interest income totaled $18,419 and $11,112 for the
three months ended February 29, 1996 and February 28, 1995, respectively. The
increase reflects the Partnership's higher lockbox escrow cash balance for the
1996 period.
Property operating expenses totaled $321,391 for the three months ended
February 29, 1996, compared with $280,593 for the three months ended February
28, 1995. The increase is primarily attributable to higher local municipal
taxes and increased repair and maintenance expenses associated with higher snow
removal costs during the quarter.
As of February 29, 1996, Crosswest was 99% leased, compared to 97% as of
February 28, 1995.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K - On March 15, 1996, based upon, among
other things, the advice of Partnership counsel, Skadden, Arps,
Slate, Meagher & Flom, the General Partner adopted a resolution
that states, among other things, if a Change of Control (as
defined below) occurs, the General Partner may distribute the
Partnership's cash balances not required for its ordinary
course day-to-day operations. "Change of Control" means any
purchase or offer to purchase more than 10% of the Units that
is not approved in advance by the General Partner. In
determining the amount of the distribution, the General Partner
may take into account all material factors. In addition, the
Partnership will not be obligated to make any distribution to
any partner and no partner will be entitled to receive any
distribution until the General Partner has declared the
distribution and established a record date and distribution
date for the distribution. The Partnership filed a Form 8-K
disclosing this resolution on March 21, 1996.
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.
COMMERCIAL PROPERTIES 4, L.P.
BY: CP4 REAL ESTATE SERVICES INC.
General Partner
Date: April 12, 1996 BY: /s/ Kenneth L. Zakin
Director and President
Date: April 12, 1996 BY: /s/William Caulfield
Vice President and
Chief Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Feb-29-1996
<CASH> 737,875
<SECURITIES> 000
<RECEIVABLES> 109,587
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 19,998,366
<DEPRECIATION> (7,618,165)
<TOTAL-ASSETS> 15,389,407
<CURRENT-LIABILITIES> 17,760
<BONDS> 2,749,953
<COMMON> 000
000
000
<OTHER-SE> 8,287,072
<TOTAL-LIABILITY-AND-EQUITY> 15,389,407
<SALES> 662,147
<TOTAL-REVENUES> 680,566
<CGS> 000
<TOTAL-COSTS> 321,391
<OTHER-EXPENSES> 316,955
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 105,987
<INCOME-PRETAX> (63,767)
<INCOME-TAX> 000
<INCOME-CONTINUING> (63,767)
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (63,767)
<EPS-PRIMARY> (1.16)
<EPS-DILUTED> (1.16)
</TABLE>
