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 August 31, 1997
or
Transition Report Pursuant to Section 13 or 15(d) ofthe 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 I.R.S. Employer Identification No.
Incorporation or Organization
3 World Financial Center, 29th Floor, 10285
New York, NY Attn: Andre Anderson
- ------------------------------------ -----------
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 August 31, At November 30,
1997 1996
Assets
Real estate, at cost:
Land $2,000,000 $2,000,000
Building and improvements 18,974,747 18,241,490
-------------------------------
20,974,747 20,241,490
Less accumulated depreciation (8,964,482) (8,337,153)
-------------------------------
12,010,265 11,904,337
Cash and cash equivalents 55,813 1,339,034
Restricted cash 600,559 873,891
Rent receivable 97,877 88,910
Prepaid expenses,
net of accumulated amortization
of $496,607 in 1997 and $423,728 in 1996 420,456 360,341
Deferred rent receivable 325,569 370,148
Other assets, net of accumulated amortization
of $67,623 in 1997 and $54,165 in 1996 169,546 182,233
Total Assets $13,680,085 $15,118,894
Liabilities and Partners' Capital (Deficit)
Liabilities:
Mortgage note payable $2,538,862 $2,653,177
Accrued interest payable -- 17,135
Accounts payable and accrued expenses 534,675 386,616
Due to affiliates 2,531,356 3,863,561
Total Liabilities 5,604,893 6,920,489
Partners' Capital (Deficit):
General Partners (124,269) (128,928)
Limited Partners (56,341 units outstanding) 8,199,461 8,327,333
Total Partners' Capital 8,075,192 8,198,405
Total Liabilities and Partners' Capital $13,680,085 $15,118,894
Consolidated Statement of Partners' Capital (Deficit)
For the nine months ended August 31, 1997
General Limited
Partners Partners Total
Balance at November 30, 1996 $(128,928) $8,327,333 $8,198,405
Net income (loss) 4,659 (127,872) (123,213)
Balance at August 31, 1997 $(124,269) $8,199,461 $8,075,192
Consolidated Statements of Operations
Three months ended Nine months ended
August 30, August 30,
1997 1996 1997 1996
Income
Rental $680,901 $680,627 $2,067,229 $2,009,917
Interest 21,671 23,989 66,277 61,486
Total Income 702,572 704,616 2,133,506 2,071,403
Expenses
Property operating 338,004 352,853 969,791 961,668
Depreciation and amortization 277,949 274,560 827,308 826,421
Interest expense 99,984 101,594 301,454 309,797
General and administrative 42,698 39,538 158,166 117,755
Total Expenses 758,635 768,545 2,256,719 2,215,641
Net Loss $(56,063) $(63,929) $(123,213) $(144,238)
Net Income (Loss) Allocated:
To the General Partners $1,210 $ 1,111 $ 4,659 $4,319
To the Limited Partners (57,273) (65,040) (127,872) (148,557)
$(56,063) $(63,929) $(123,213) $(144,238)
Per limited partnership unit
(56,341 outstanding) $(1.02) $(1.16) $(2.27) $(2.64)
Consolidated Statements of Cash Flows
For the nine months ended August 31, 1997 1996
Cash Flows From Operating Activities:
Net loss $(123,213) $(144,238)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation 712,295 720,412
Amortization 115,013 106,009
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Restricted cash 273,332 (67,407)
Rent receivable (8,967) (17,062)
Prepaid expenses and other assets (162,441) (81,592)
Deferred rent receivable 44,579 20,553
Accrued interest payable (17,135) (614)
Accounts payable and accrued expenses (738) (143,465)
Due to affiliates (1,332,205) 149,343
Net cash provided by (used for) operating activities (499,480) 541,939
Cash Flows From Investing Activities:
Tenant reimbursements for improvements 0 36,390
Additions to real estate (818,223) (113,639)
Accounts payable - real estate assets 148,797 0
Net cash used for investing activities (669,426) (77,249)
Cash Flows From Financing Activities:
Mortgage principal payments (114,315) (94,924)
Net cash used for financing activities (114,315) (94,924)
Net increase (decrease) in cash and cash equivalents (1,283,221) 369,766
Cash and cash equivalents, beginning of period 1,339,034 859,541
Cash and cash equivalents, end of period $ 55,813 $1,229,307
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $168,068 $159,219
Supplemental Disclosure of Non-Cash Investing Activities:
Write-off of fully depreciated tenant improvements $84,966 $3,823
Notes to the Consolidated Financial Statements
The unaudited consolidated financial statements should be read in conjunction
with the Partnership's annual 1996 audited consolidated financial statements
within Form 10-K.
The unaudited consolidated financial statements include all normal and
reoccurring adjustments which are, in the opinion of management, necessary to
present a fair statement of financial position as of August 31, 1997 and the
results of operations for the three and nine months ended August 31, 1997 and
1996, cash flows for the nine months ended August 31, 1997 and 1996 and the
statement of partners' capital (deficit) for the nine months ended
August 31,1997. Results of operations for the period are not necessarily
indicative of the results to be expected for the full year.
Reclassification. Certain prior year amounts have been reclassified in order
to conform to the current year's presentation.
The following significant event has occurred subsequent to fiscal year 1996, or
the following material contingency exists, which requires disclosure in this
interim report per Regulation S-X, Rule 10-01, Paragraph (a)(5):
Effective as of December 1, 1996,the Partnership began reimbursing certain
expenses incurred by CP4 Real Estate Services Inc. and its affiliates in
servicing the Partnership to the extent permitted by the partnership agreement.
In prior years, affiliates of CP4 Real Estate Services Inc. had voluntarily
absorbed these expenses.
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 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 the Partnership's
remaining property, Crosswest Office Center ("Crosswest"), or held in escrow to
fund future mortgage payments. It is anticipated that cash distributions to the
partners of the Partnership will remain suspended for the foreseeable future in
light of these funding needs and the Partnership's decision to market Crosswest
for sale. Any cash reserves held by the Partnership at the time of sale will
be distributed together with proceeds resulting from such a sale.
The Partnership had cash and cash equivalents at August 31, 1997 of $55,813
compared with $1,339,034 at November 30, 1996. The decrease is primarily
attributable to real estate additions, mortgage principal payments and the
payment of certain other reimbursable expenses exceeding net cash from
operating activities. At August 31, 1997, the Partnership had a restricted
cash balance of $600,559 compared with $873,891 at November 30, 1996. The
restricted cash balance at August 31, 1997 consisted of $42,920 in security
deposits, $227,996 reserved to fund real estate taxes at Crosswest and $329,643
representing the building lockbox escrow which was set up during the fourth
quarter of 1993, pursuant to Crosswest's amended loan agreement. The decrease
is primarily attributable to the payment in 1997 of invoices for building
improvements related to the first floor renovation, which was partially offset
by contributions to the escrow for real estate taxes. 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.
During the fiscal third quarter, the General Partners executed three lease
renewals totaling 4,743 square feet. As previously reported, the property was
97% leased at May 31, 1997. However, an additional 6,000 square feet was
recently added to the Property's total leasable area following the conversion
of an existing first-floor storage area to usable office space. Adjusting for
this additional space resulted in the Property being 94% leased at
August 31,1997.
Rent receivable at August 31, 1997 was $97,877 compared to $88,910 at November
30, 1996. The increase is mainly due to the timing of rental payments. Prepaid
expenses at August 31, 1997 were $420,456 compared to $360,341 at
November 30,1996. The increase is largely due to the payment of leasing
commissions. Deferred rent receivable was $325,569 at August 31, 1997,
compared to $370,148 at November 30, 1996, down primarily due to the
amortization of rental concessions.
Accrued interest payable at August 31, 1997 was $0 compared to $17,135 at
November 30, 1996. The decrease is due to the timing of mortgage payments.
Accounts payable and accrued expenses totaled $534,675 at August 31, 1997
compared to $386,616 at November 30, 1996. The increase is primarily a result
of the timing of payments for building improvements and real estate taxes. Due
to affiliates was $2,531,356 at August 31, 1997, compared to $3,863,561 at
November 30, 1996. The decrease mainly reflects the reimbursement of certain
fees and expenses.
Results of Operations
Partnership operations resulted in a net loss of $56,063 and $123,213,
including depreciation and amortization, for the three and nine months ended
August 31, 1997, respectively, compared with net losses of $63,929 and $144,238
for the three and nine months ended August 31, 1996, respectively. The lower
net loss for the 1997 periods is primarily attributable to an increase in
rental income and, for the three month period, lower property operating
expenses, partially offset by an increase in general and administrative
expenses.
Rental income totaled $680,901 and $2,067,229 for the three and nine months
ended August 31, 1997, respectively, compared with $680,627 and $2,009,917 for
the three and nine months ended August 31, 1996, respectively. The higher
rental income in 1997 is largely due to an increase in base rents and tenant
reimbursable income.
Property operating expenses totaled $338,004 and $969,791 for the three and
nine months ended August 31, 1997, respectively, largely unchanged from
$352,853 and $961,668 for the comparable periods in 1996.
General and administrative expenses for the three and nine months ended
August 31, 1997 were $42,698 and $158,166, respectively, compared with $39,538
and $117,755, respectively, for the same periods in 1996. During the 1997
period,certain expenses incurred by CP4 Real Estate Services Inc., its
affiliates, and an unaffiliated third party service provider in servicing the
Partnership,which were voluntarily absorbed by affiliates of CP4 Real Estate
Services Inc.in prior periods, were accrued to be reimbursed to CP4 Real Estate
Services Inc. and its affiliates.
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 - 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.
COMMERCIAL PROPERTIES 4, L.P.
BY: CP4 REAL ESTATE SERVICES INC.
General Partner
Date: October 15, 1997 BY: /s/Mark J. Marcucci
------------------------
Director and President
Date: October 15, 1997 BY: /s/William Caulfield
------------------------
Vice President and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Nov-30-1997
<PERIOD-END> August-31-1997
<CASH> 55,813
<SECURITIES> 000
<RECEIVABLES> 97,877
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 153,690
<PP&E> 20,974,747
<DEPRECIATION> (8,964,482)
<TOTAL-ASSETS> 13,680,085
<CURRENT-LIABILITIES> 534,675
<BONDS> 2,538,862
<COMMON> 000
000
000
<OTHER-SE> 8,075,192
<TOTAL-LIABILITY-AND-EQUITY> 13,680,085
<SALES> 2,067,229
<TOTAL-REVENUES> 2,133,506
<CGS> 000
<TOTAL-COSTS> 969,791
<OTHER-EXPENSES> 985,474
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 301,454
<INCOME-PRETAX> (123,213)
<INCOME-TAX> 000
<INCOME-CONTINUING> (123,213)
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (123,213)
<EPS-PRIMARY> (2.27)
<EPS-DILUTED> (2.27)
</TABLE>
