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, 1999
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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
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COMMERCIAL PROPERTIES 4, L.P.
-----------------------------
Exact Name of Registrant as Specified in its Charter
Virginia 11-2711361
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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) 526-3183
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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
--- ---
<PAGE>
2
COMMERCIAL PROPERTIES 4, L.P.
AND CONSOLIDATED VENTURE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
At August 31, At November 30,
1999 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Real estate assets held for disposition $ -- $12,428,039
Cash and cash equivalents 836,180 259,141
Restricted cash -- 601,805
Accounts receivable, net of allowance for
doubtful accounts of $31,328 in 1999 -- 92,786
Prepaid expenses and other receivables 15,455 56,096
Other assets, net of accumulated amortization
of $-0- in 1999 and $90,051 in 1998 73,232 112,873
- ------------------------------------------------------------------------------------------
Total Assets $924,867 $13,550,740
==========================================================================================
Liabilities and Partners' Capital (Deficit)
Liabilities:
Mortgage note payable $ -- $ 2,352,981
Accounts payable and accrued expenses 120,635 731,125
Due to affiliates, net 323,515 2,010,531
--------------------------
Total Liabilities 444,150 5,094,637
--------------------------
Partners' Capital (Deficit):
General Partners -- (119,306)
Limited Partners (56,341 units outstanding) 480,717 8,575,409
--------------------------
Total Partners' Capital 480,717 8,456,103
- ------------------------------------------------------------------------------------------
Total Liabilities and Partners' Capital $924,867 $13,550,740
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
For the nine months ended August 31, 1999
General Limited
Partners Partners Total
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at November 30, 1998 $(119,306) $ 8,575,409 $ 8,456,103
Net income 119,306 2,328,248 2,447,554
Distributions -- (10,422,940) (10,422,940)
- ------------------------------------------------------------------------------------------
Balance at August 31, 1999 $ -- $ 480,717 $ 480,717
==========================================================================================
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
3
COMMERCIAL PROPERTIES 4, L.P.
AND CONSOLIDATED VENTURE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended August 31, Nine months ended August 31,
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income
Rental $ -- $733,214 $241,652 $2,122,523
Interest 10,117 7,185 220,406 20,807
---------------------------------------------------
Total Income 10,117 740,399 462,058 2,143,330
- ------------------------------------------------------------------------------------------
Expenses
Property operating -- 284,040 237,654 902,595
Depreciation and amortization -- 4,486 -- 572,233
Interest expense 3,232 90,219 32,325 270,685
General and administrative 74,118 119,443 385,678 218,430
Bad debts -- -- 31,498 --
---------------------------------------------------
Total Expenses 77,350 498,188 687,155 1,963,943
Net Income (Loss) before gain
on sale of real estate (67,233) 242,211 (225,097) 179,387
Gain on sale of real estate -- -- 2,672,651 --
- ------------------------------------------------------------------------------------------
Net Income (Loss) $(67,233) $242,211 $2,447,554 $ 179,387
==========================================================================================
Net Income (Loss) Allocated:
To the General Partners $ -- $ 4,845 $ 119,306 $ 8,665
To the Limited Partners (67,233) 237,366 2,328,248 170,722
- ------------------------------------------------------------------------------------------
$(67,233) $242,211 $2,447,554 $ 179,387
==========================================================================================
Per limited partnership unit
(56,341 outstanding) $ (1.19) $ 4.21 $ 41.32 $ 3.03
- ------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
4
COMMERCIAL PROPERTIES 4, L.P.
AND CONSOLIDATED VENTURE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended August 31,
1999 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ 2,447,554 $ (62,824)
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Gain on sale of real estate (2,672,651) --
Depreciation -- 507,688
Amortization -- 60,059
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Restricted cash 601,805 20
Rent receivable 92,786 10,727
Prepaid expenses and other assets 40,641 (140,422)
Other assets 39,641 --
Deferred rent receivable -- 28,006
Accounts payable and accrued expenses (502,336) 74,202
Due to affiliates, net (1,687,016) 85,628
----------------------------
Net cash provided by (used for) operating activities (1,639,576) 563,084
- ------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Proceeds from sale of real estate 14,992,536 --
Additions to real estate -- (34,780)
----------------------------
Net cash provided by (used for) investing activities 14,992,536 (34,780)
- ------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Mortgage principal payments (2,352,981) (73,614)
Cash distributions (10,422,940) --
----------------------------
Net cash used for financing activities (12,775,921) (73,614)
- ------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 577,039 454,690
Cash and cash equivalents, beginning of period 259,141 133,958
- ------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 836,180 $ 588,648
==========================================================================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 128,499 $ 97,165
- ------------------------------------------------------------------------------------------
Supplemental Disclosure of Non-Cash Operating Activities:
In connection with the sale of real estate, mortgage costs
in the amount of $35,247 were netted against gain on sale
of real estate in 1999.
Adjustment of real estate held for investment $ (108,154) $ --
Adjustment of accounts payable and accrued expenses 108,154 --
----------------------------
$ -- $ --
- ------------------------------------------------------------------------------------------
Supplemental Disclosure of Non-Cash Investing Activities:
Write-off of fully depreciated tenant improvements $ -- $ 381,443
- ------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
5
COMMERCIAL PROPERTIES 4, L.P.
AND CONSOLIDATED VENTURE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The unaudited consolidated financial statements should be read in conjunction
with the Partnership's annual 1998 audited consolidated financial statements
within Form 10-K.
The unaudited consolidated financial statements include all normal and recurring
adjustments which are, in the opinion of management, necessary to present a fair
statement of financial position as of August 31, 1999 and the results of
operations and cash flows for the nine months ended August 31, 1999 and 1998 and
the statement of changes in partners' capital (deficit) for the nine months
ended August 31, 1999.
The Partnership's remaining real estate assets, deferred rent receivable and
prepaid leasing costs were reclassified on the consolidated balance sheets at
August 31, 1998 to "Real estate assets held for disposition." The Partnership
also suspended recording depreciation and amortization in accordance with the
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." On
December 29, 1998, the Partnership's remaining property, Crosswest Office Center
("Crosswest") was sold for a selling price of approximately $12.3 million net of
existing mortgage debt and closing adjustments, which resulted in a gain of
approximately $2.6 million which has been reflected in the Consolidated
Statement of Operations.
As a result of the sale of Crosswest, the Partnership paid a cash distribution
to Limited Partners of approximately $10.4 million on May 14, 1999.
No other significant events have occurred subsequent to fiscal year 1998, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
<PAGE>
6
COMMERCIAL PROPERTIES 4, L.P.
AND CONSOLIDATED VENTURE
Part I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
The Partnership's final property, Crosswest, was sold on December 29, 1998 to an
unaffiliated buyer, Crosswest Associates, L.P. (the "Buyer") for net proceeds of
approximately $12.3 million. As a result of the sale, the General Partners paid
a cash distribution of approximately $10.4 million, representing a portion of
the net sales proceeds. The remaining proceeds will be used to pay the
Partnership's liabilities and expenses through dissolution and to establish a
reserve for contingencies. Any cash remaining after the payment of these items
and establishment of reserves will be distributed upon the dissolution of the
Partnership which is expected to occur in the fourth quarter of 1999.
The Partnership had cash and cash equivalents at August 31, 1999 of $836,180
compared with $259,141 at November 30, 1998. The increase is primarily
attributable to net proceeds from the sale of Crosswest. At August 31, 1999, the
Partnership's restricted cash balance was $-0- compared with $601,805 at
November 30, 1998. The decrease is attributable to the transfer of tenant
security deposits upon the sale of Crosswest.
Prepaid expenses totaled $15,455 at August 31, 1999, compared with $56,096 at
November 30, 1998. The decrease was primarily due to the decrease in prepaid
real estate taxes resulting from the sale of Crosswest. Accounts payable and
accrued expenses totaled $120,635 at August 31, 1999 compared with $731,125 at
November 30, 1998. The decrease is primarily attributable to decreases in
accrued property expenses, security deposits, and payables related to
improvements to Crosswest.
Other assets totaled $73,232 at August 31, 1999, compared with $112,873 at
November 30, 1998. Included in other assets is a receivable in the amount of
$73,004, net of related expenses for real estate taxes, which are expected to be
refunded by October 31, 1999.
Due to affiliates totaled $323,515 at August 31, 1999, compared with $2,010,531
at November 30, 1998. The decrease mainly reflects the reimbursement of certain
fees and expenses which were previously made by the General Partners during the
origination of the Partnership. 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 postponed reimbursement of certain fees
and expenses. Funds made available from the sale of Crosswest were used to pay
such amounts due to affiliates.
On December 29, 1998, the mortgage payable of $2,352,981 was paid from the
proceeds of the sale of Crosswest.
Results of Operations
- ---------------------
Partnership operations resulted in net loss of $67,233 for the three months
ended August 31, 1999 and net income of $2,447,554 for the nine months ended
August 31, 1999, compared with net income of $242,211 for the three months ended
August 31, 1998 and net income of $179,387 for the nine months ended August 31,
1998. The increase in net income for the nine months ended August 31, 1999 is
primarily attributable to the sale of Crosswest.
<PAGE>
7
COMMERCIAL PROPERTIES 4, L.P.
AND CONSOLIDATED VENTURE
Rental income totaled $-0- and $241,652 for the three and nine months ended
August 31, 1999, compared with $733,214 and $2,122,523 for the three and nine
months ended August 31, 1998. The decrease is attributable to the disposition of
Crosswest. Interest income totaled $10,117 and $220,406 for the three and nine
months ended August 31, 1999 compared with $7,185 and $20,807 for the
corresponding period in 1998. The increase is primarily due to higher average
cash balances.
Property operating expenses totaled $-0- and $237,654 for the three and nine
months ended August 31, 1999, compared with $284,040 and $902,595 for the three
and nine months ended August 31, 1998. The decrease primarily reflects
reductions in all operating expense categories due to the sale of Crosswest.
Interest expense for the three and nine months ended August 31, 1999 decreased
from the corresponding period in 1998, reflecting the payoff of the mortgage
balance upon the sale of Crosswest. General and administrative expenses totaled
$74,118 and $385,678 for the three and nine months ended August 31, 1999,
compared with $119,443 and $218,430 for the three and nine months ended August
31, 1998. The increase for the nine months ended August 31, 1999 is primarily
attributable to marketing fees and post closing adjustments relating to the sale
of Crosswest.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(27) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K -
No reports on Form 8-K were filed during the three months
ended August 31, 1999.
<PAGE>
8
COMMERCIAL PROPERTIES 4, L.P.
AND CONSOLIDATED VENTURE
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.
A General Partner
Date: October 15, 1999 BY: /s/Michael T. Marron
-------------------------------------
Name: Michael T. Marron
Title: President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Nov-30-1999
<PERIOD-END> Aug-31-1999
<CASH> 836,180
<SECURITIES> 000
<RECEIVABLES> 31,328
<ALLOWANCES> (31,328)
<INVENTORY> 000
<CURRENT-ASSETS> 924,867
<PP&E> 000
<DEPRECIATION> 000
<TOTAL-ASSETS> 924,867
<CURRENT-LIABILITIES> 120,635
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 480,717
<TOTAL-LIABILITY-AND-EQUITY> 924,867
<SALES> 241,652
<TOTAL-REVENUES> 462,058
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 687,155
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> (225,097)
<INCOME-TAX> 000
<INCOME-CONTINUING> (225,097)
<DISCONTINUED> 000
<EXTRAORDINARY> 2,672,651
<CHANGES> 000
<NET-INCOME> 2,447,554
<EPS-BASIC> 41.32
<EPS-DILUTED> 41.32
</TABLE>
