<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1997 Commission File Number 0-14569
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SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
(exact name of small business issuer as specified in its charter)
Maryland 04-2848939
(State or other jurisdiction of I.R.S. Employer Identification No.)
incorporation or organization)
One International Place, Boston, MA 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 330-8600
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
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<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
BALANCE SHEETS
- ------------------------------------------------------------------------------------------------- ----------------
March 31, December 31,
1997 1996
(Unaudited) (Audited)
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<S> <C> <C>
ASSETS
Investment in Real Estate at cost
Land $ 5,833,466 $ 5,833,466
Building improvements and personal property 91,461,659 91,230,320
---------------- ----------------
97,295,125 97,063,786
Less accumulated depreciation 42,330,700 41,381,951
---------------- ----------------
54,964,425 55,681,835
Other Assets
Cash and cash equivalents 1,093,204 973,927
Accounts receivable - other 8,431 8,431
Tenant accounts receivable 349,072 499,712
Tenant security deposits - funded 373,779 438,621
Escrows and reserves 3,700,087 3,609,266
Prepaid expenses and other assets 729,694 872,473
Deferred costs, less accumulated amortization of $800,120
and $759,587, as of March 31, 1997 and December 31,
1996 respectively 1,503,685 1,544,218
---------------- ----------------
TOTAL ASSETS $ 62,722,377 $ 63,628,483
================ ================
LIABILITIES AND PARTNERS' CAPITAL
Liability applicable to investment in rental property
Mortgage payable $ 59,371,513 $ 59,683,891
Other Liabilities
Accounts payable and accrued expenses 2,147,717 2,767,786
Tenant security deposits payable 355,981 328,592
Rent deferred credits 110,894 134,439
---------------- ----------------
Total Liabilities 61,986,105 62,914,708
---------------- ----------------
MINORITY INTEREST (note A) 2,590,274 2,476,980
---------------- ----------------
PARTNERS' CAPITAL:
Investor limited partners, units of investor limited
Partnership interest, 649 unit authorized and outstanding, 1,098,111 1,184,368
General partners (2,952,113) (2,947,573)
---------------- ----------------
(1,854,002) (1,763,205)
---------------- ----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 62,722,377 $ 63,628,483
================ ================
</TABLE>
See notes to financial statements
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<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
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For the three months ended March 31, 1997 and 1996 1997 1996
- ------------------------------------------------------------------------------------------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C>
Income
Rental $ 5,889,239 $ 5,625,452
Laundry income 78,489 130,816
Interest income 30,121 31,021
Other income 209,984 132,320
---------------- ----------------
Total income 6,207,833 5,919,609
---------------- ----------------
Expenses
Utilities 1,231,890 1,327,282
Repairs & maintenance 439,998 436,001
Taxes 522,337 436,676
Salaries 683,188 614,892
Operating expense 255,916 281,986
Administrative expenses 73,317 97,087
Bad debt expense 253,730 261,591
Advertising & rental expense 61,536 73,328
Insurance 87,703 99,652
Asset & property management fees 200,406 191,721
---------------- ----------------
Total operating expenses 3,810,021 3,820,216
---------------- ----------------
Other expenses
Interest expense 1,386,033 1,412,946
Depreciation and amortization 989,282 1,005,504
---------------- ----------------
Total expenses 6,185,336 6,238,666
---------------- ----------------
Net income (loss) before minority interest 22,497 (319,057)
---------------- ----------------
Minority Interest in Net Earnings of Operating
Partnership 113,294 22,603
---------------- ----------------
Net loss $ (90,797) $ (341,660)
================ ================
Net loss allocated to general partners $ (4,540) $ (17,083)
================ ================
Net loss allocated to investor limited partner $ (86,257) $ (324,577)
================ ================
Net loss per unit of limited partners interest $ (133) $ (500)
================ ================
Weighted average number of units outstanding 649 649
================ ================
<CAPTION>
STATEMENTS OF CASH FLOWS
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For the three months ended 1997 1996
March 31, (Unaudited) (Unaudited)
- ------------------------------------------------------------------------------------------------- ----------------
<S> <C> <C>
Cash flow from operating activities
Net loss $ (90,797) $ (341,660)
Adjustments to reconcile net loss to
net cash provided by operating activities
Minority Interest in Net Earnings of
Operating Partnerships 113,294 22,603
Depreciation 948,749 950,685
Amortization 40,533 54,819
Changes in assets and liabilities
Decrease in tenants accounts receivable 150,640 142,201
Net security deposits received (paid) 92,231 (728)
Increase in escrows and reserves (90,821) (310,277)
Decrease in prepaid expenses and other assets 142,779 266,962
Decrease in rent deferred credits (23,545) -
Decrease in accounts payable and
accrued expenses (620,069) (165,693)
---------------- ----------------
Net cash provided by operating activities 662,994 618,912
---------------- ----------------
Cash flows from investing activities
Acquisition of and improvements to properties (231,339) (364,781)
---------------- ----------------
Net cash used in investing activities (231,339) (364,781)
---------------- ----------------
Cash flows from financing activities
Principal payments on mortgage note (312,378) (285,466)
---------------- ----------------
Net cash used in financing activities (312,378) (285,466)
---------------- ----------------
Net increase (decrease) in cash and cash equivalents 119,277 (31,335)
Cash and cash equivalents, beginning of period 973,927 1,561,098
---------------- ----------------
Cash and cash equivalents end of period $ 1,093,204 $ 1,529,763
================ ================
Cash paid for interest $ 1,386,033 $ 1,412,946
================ ================
</TABLE>
See notes to financial statements
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<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN PARTNERS
CAPITAL
- ----------------------------------------------------------------------------------------------- -------------------
For the three months Units of
ended limited General Limited
March 31, 1997 and 1996 partnership partners' partners' Total
(Unaudited) interest capital capital capital
- ------------------------------------ ---------------------------------------------------------- -------------------
<S> <C> <C> <C> <C>
Balance December 31, 1996 649 $ (2,947,573) $ 1,184,368 $ (1,763,205)
Net loss (4,540) (86,257) (90,797)
---------------- ----------------- ---------------- ----------------
Balance, March 31, 1997 649 $ (2,952,113) $ 1,098,111 $ (1,854,002)
================ ================= ================ ================
Balance December 31, 1995 649 $ (2,857,284) $ 2,899,876 $ 42,592
Net loss (17,083) (324,577) (341,660)
---------------- ----------------- ---------------- ----------------
Balance, March 31, 1996 649 $ (2,874,367) $ 2,575,299 $ (299,068)
================ ================= ================ ================
</TABLE>
See notes to financial statements
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<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
1. ACCOUNTING AND FINANCIAL REPORTING POLICIES
The condensed financial statements included herein have been prepared
by the Partnerships,without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. The Partnership's accounting and financial
reporting policies are in conformity with generally accepted accounting
principles and include adjustments in interim periods considered necessary for
a fair presentation of the results of operations. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. It is suggested that these
financial statements be read in conjunction with the financial statements and
notes thereto included in the Partnership's latest annual report on Form 10-K.
The accompanying consolidated financial statements include the
accounts of the Partnership and the Operating Partnerships prepared on the
accrual basis of accounting. Theodore N. Lerner's ownership in the Operating
Partnership's has been reflected as a minority interest in the accompanying
consolidated balance sheets and statements of operations. All significant
intercompany accounts and transactions have been eliminated through
consolidation.
The accompanying consolidated financial statements reflect the
Partnership's results of operations for an interim period and are not
necessarily indicative of the results of operations for the year ending
December 31, 1997.
2. TAXABLE LOSS
The Partnership's taxable loss for 1997 is expected to differ from
that for financial reporting purposes primarily due to accounting differences
in the recognition of depreciation incurred by the Operating Partnerships.
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<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1997
(Unaudited)
3. INVESTMENT IN OPERATING PARTNERSHIPS
The following summarizes the results of operations for the Operating
Partnerships:
Three months ended
March 31,
------------------------------------
1997 1996
---------------- ----------------
Income
Rental income $ 5,889,239 $ 5,625,452
Interest and other income 294,711 274,419
---------------- ----------------
6,183,950 5,899,871
---------------- ----------------
Expenses
Depreciation and amortization 948,749 950,685
Operating expenses 3,187,960 2,772,987
Taxes and insurance 610,040 669,326
---------------- ----------------
4,746,749 4,392,998
---------------- ----------------
Net income $ 1,437,201 $ 1,506,873
================ ================
4. RELATED PARTY TRANSACTIONS
The Operating Partnerships paid an affiliate of Three Winthrop
Properties Inc. (the "Managing General Partner") a property management fee of
$175,406 and $166,721 for the three months ended March 31,1997 and 1996,
respectively. An asset and property management fee of $25,000 for the three
months ended March 31, 1997 and 1996 was also paid to an affiliate of the
Managing General Partner.
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<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Liquidity and Capital Resources
Springhill Lake Investors Limited Partnership (the "Partnership"), has invested
as a general partner in nine limited partnerships (collectively, the "Operating
Partnerships') and as such, receives distributions of cash flow from the
Operating Partnerships and is responsible for expenditures consisting of (i)
interest payable on indebtedness (ii) administrative expenses and (iii) fees
payable to affiliates of Three Winthrop Properties Inc. (the Managing General
Partner) and Linnaeus Lexington Associates Limited Partnership,the general
partners of the properties. Each Operating Partnership owns a section of a
garden apartment complex in Greenbelt, Maryland (the "Project"). The General
Partners believe that funds distributed by the Operating Partnerships to the
Partnership will be sufficient to pay such expenditures. The Operating
Partnerships' cash and cash equivalents experienced a $119,277 increase at
March 31, 1997 as compared to December 31, 1996. The increase was due to
$662,994 provided by operating activities, which was partially offset by
$231,339 used in investing activities and $312,378 used for principal reduction
to the mortgage payable. At March 31, 1997, the Operating Partnerships' cash
reserves were $1,093,204. The partnership also has a cash replacement reserve
account held by its lender. At March 31, 1997, the balance in the account was
$2,565,007. All other increases (decreases) in certain assets and liabilities
are the result of the timing of receipt and payment of various operating
activities.
The Partnership resumed making cash distributions to limited partners in 1996.
The Partnership intends to continue to limit cash distributions in order to
enable it to have sufficient capital to fund the capital improvements and
reserves required for the Project. However, based on the performance of the
Project the Partnership will continue to review its distribution policy on
quarterly basis.
Results of Operations
The Partnership operated at a net loss of $90,797 for the three months ended
March 31, 1997, compared to a net loss of $341,660 for the three months ended
March 31, 1996. Excluding non-cash items such as depreciation and amortization,
however, the Operating Partnership generated positive cash flow which was used
to make improvements to the property and principal amortization payments on the
loan encumbering the properties.
The Operating Partnership's revenue increased by 4.9% for the first quarter of
1997 compared to the first quarter of 1996 due to increases in rental and other
income which more than offset a decrease in laundry income. Although average
rental rates at the Project have remained constant since the first quarter of
1996, rental revenues increased from $5,626,452 for the three month period
ended March 31, 1996 to $5,889,239 for the comparable period in 1997 due to an
increase in average occupancy from 91.2% to 93.9% for such periods. The
increase in average occupancy resulted from an increase in rent concessions
offered to attract new tenants. The increase in rental concessions did not have
a significant impact on average rental rates. Results of Operations (continued)
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<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
The direct operating expenses remained relatively constant for the three months
ended March 31, 1997 as compared to the three months ended March 31, 1996.
Increases in taxes, salaries and asset and property management fees were offset
by decreases in utilities, administrative expenses, advertising and rental
expense and insurance. Other expense items remained relatively constant.
Interest expense decreased to $1,386,033 as compared to $1,412,946 for the
prior comparable period due to a reduction in the outstanding amount of
principal due to the monthly principal payment amounts. In addition,
depreciation and amortization expense for the three months ended March 31, 1997
was $989,282 as compared to $1,055,504 for the prior comparable period.
The Washington, D.C., area apartment market is stable but remains competitive.
The Partnership continues to make capital improvements to the Property to
enhance its competitiveness within the local market. The Partnership spent
$231,339 on capital improvements during the first quarter of 1997 compared to
$364,781 in the first quarter of 1996. Improvements included replacing
appliances and bathroom tile in apartment units and also included design costs
for a new leasing building. Most of the capital improvements are funded by
replacement reserves held by the lender. The balance of replacement reserves
was approximately $2,565,007 at March 31, 1997.
The results of operations in future quarters may differ from the results of
operations for the quarter ended March 31, 1997, due to inflation and changing
economic conditions which could affect occupancy levels, rental rates and
operating expenses.
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<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit 27, Financial Data Schedule is filed as an exhibit to this report.
b) Report on Form 8-K: None
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<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SPRINGHILL LAKE INVESTORS
LIMITED PARTNERSHIP
Date: May 15, 1997 By: /s/Michael L. Ashner
---------------------
Michael L. Ashner
Chief Executive Officer
Date: May 15, 1997 By: /s/Edward V. Williams
----------------------
Edward V. Williams
Chief Financial Officer
- 10 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from unaudited financial statements for the
three month period ending March 31, 1997 and is
qualified in its entirety by reference to such financial
statements
</LEGEND>
<CIK> 0000763399
<NAME> SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 1,093,204
<SECURITIES> 0
<RECEIVABLES> 357,503
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 97,295,125
<DEPRECIATION> (42,330,700)
<TOTAL-ASSETS> 62,722,377
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (1,854,002)
<TOTAL-LIABILITY-AND-EQUITY> 62,722,377
<SALES> 0
<TOTAL-REVENUES> 6,177,712
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,736,704
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,386,033
<INCOME-PRETAX> (90,797)
<INCOME-TAX> 0
<INCOME-CONTINUING> (90,797)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (90,797)
<EPS-PRIMARY> (132.91)
<EPS-DILUTED> (132.91)
</TABLE>
