<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 June 30, 1997 Commission File Number 0-14569
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
_________ _________
<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
PART 1 - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
BALANCE SHEETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
June 30, December 31,
1997 1996
(Unaudited) (Audited)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in Real Estate At Cost
Land $ 5,833,466 $ 5,833,466
Buildings improvements and personal property 91,999,984 91,230,320
----------------- -----------------
97,833,450 97,063,786
Less accumulated depreciation 43,324,223 41,381,951
----------------- -----------------
54,509,227 55,681,835
Other Assets
Cash and cash equivalents 1,027,467 973,927
Accounts receivable - other 8,431 8,431
Tenant accounts receivable 369,969 499,712
Tenant security deposits - funded 422,966 438,621
Escrows and reserves 4,136,611 3,609,266
Prepaid expenses and other assets 300,361 872,473
Deferred costs, less accumulated amortization of $840,653 and
$759,587, as of June 30, 1997 and December 31, 1996 respectively 1,463,152 1,544,218
----------------- -----------------
TOTAL ASSETS $ 62,238,184 $ 63,628,483
================= =================
LIABILITIES AND PARTNERS' CAPITAL
Liability applicable to investment in rental property
Mortgage payable $ 59,051,828 $ 59,683,891
Other deferred income 550,000 -
Other Liabilities
Accounts payable and accrued expenses 914,368 2,767,786
Tenant security deposits payable 381,636 328,592
Rent deferred credits 173,391 134,439
----------------- -----------------
TOTAL LIABILITIES 61,071,223 62,914,708
----------------- -----------------
MINORITY INTEREST (note A) 2,763,045 2,476,980
----------------- -----------------
PARTNERS' CAPITAL:
Investor limited partners, units of investor limited
Partnership interest, 649 unit authorized and outstanding, 1,343,133 1,184,368
General partners (2,939,217) (2,947,573)
----------------- -----------------
(1,596,084) (1,763,205)
----------------- -----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 62,238,184 $ 63,628,483
================= =================
</TABLE>
See notes to financial statements
-2-
<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Three months ended June 30, Six months ended June 30,
(Unaudited) (Unaudited)
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income
Rental $ 5,853,804 $ 5,801,586 11,743,043 $ 11,427,038
Laundry income 78,489 52,326 156,978 183,142
Interest income 51,122 13,104 81,243 44,125
Other income 184,036 168,806 394,020 301,126
---------------- --------------- --------------- ---------------
Total income 6,167,451 6,035,822 12,375,284 11,955,431
---------------- --------------- --------------- ---------------
Expenses
Utilities 936,564 844,669 2,168,454 2,171,951
Repairs & maintenance 487,534 634,158 927,532 1,070,159
Taxes 419,296 431,796 941,633 868,472
Salaries 671,611 639,640 1,354,799 1,254,532
Operating expense 200,402 213,666 456,318 477,401
Administrative expenses 79,526 55,013 152,843 170,351
Bad debt expense 167,649 116,904 421,379 378,495
Advertising & rental expense 63,094 57,307 124,630 130,635
Insurance 87,495 99,403 175,198 199,055
Asset and property management fees 210,809 199,324 411,215 391,045
---------------- --------------- --------------- ---------------
Total operating expenses 3,323,980 3,291,880 7,134,001 7,112,096
---------------- --------------- --------------- ---------------
Other expenses
Interest expense 1,378,726 1,406,257 2,764,759 2,819,203
Depreciation and amortization 1,034,056 955,020 2,023,338 1,960,524
---------------- --------------- --------------- ---------------
Total expenses 5,736,762 5,653,157 11,922,098 11,891,823
---------------- --------------- --------------- ---------------
Net income before minority
interest 430,689 382,665 453,186 63,608
---------------- --------------- --------------- ---------------
Minority Interest in Net Earnings of
Operating Partnership 172,771 184,992 286,065 270,221
---------------- --------------- --------------- ---------------
Net income (loss) $ 257,918 $ 197,673 167,121 $ (206,613)
================ =============== =============== ===============
Net income (loss) allocated to general
partners $ 12,896 $ 9,884 8,356 $ (10,331)
================ =============== =============== ===============
Net income (loss )allocated to investor
limited partner $ 245,022 $ 187,789 158,765 $ (196,282)
================ =============== =============== ===============
Net income (loss) per unit of limited
partners interest $ 378 $ 334 245 $ (302)
================ =============== =============== ===============
Weighted average number of units
outstanding 649 649 649 649
================ =============== =============== ===============
</TABLE>
See notes to financial statements
-3-
<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
For the six months ended 1997 1996
June 30, (Unaudited) (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flow from operating activities
Net income (loss) $ 167,121 $ (206,613)
Adjustments to reconcile net income to
net cash provided by operating activities
Minority interest in net earnings of
operating partnerships 286,065 270,221
Depreciation 1,942,272 1,850,886
Amortization 81,066 109,638
Changes in assets and liabilities
Decrease in tenants accounts receivable 129,743 57,751
Net security deposits received 68,699 67,659
Increase in escrows (1,115,261) (942,118)
Decrease in prepaid expenses and other assets 572,112 803,495
Decrease in rent deferred credits 38,952 -
Decrease in accounts payable and accrued expenses (1,853,418) (284,261)
Increase in other deferred income 550,000 -
----------------- -----------------
Net cash provided by operating activities 867,351 1,726,658
----------------- -----------------
Cash flows from investing activities
Replacement reserve contributions (452,502) (452,502)
Replacement reserve withdrawals 1,040,418 501,029
Acquisition of and improvements to properties (769,664) (1,023,062)
----------------- -----------------
Net cash used in investing activities (181,748) (974,535)
----------------- -----------------
Cash flows from financing activities
Principal payments on mortgage note (632,063) (577,619)
Distributions to partners - (1,113,547)
----------------- -----------------
Net cash used in financing activities (632,063) (1,691,166)
----------------- -----------------
Net increase (decrease) in cash and cash equivalents 53,540 (939,043)
Cash and cash equivalents, beginning of period 973,927 1,561,098
----------------- -----------------
Cash and cash equivalents end of period $ 1,027,467 $ 622,055
================= =================
Supplemental disclosure of cash flow information
Cash paid for interest $ 2,764,759 $ 2,819,203
================= =================
</TABLE>
See notes to financial statements
-4-
<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Units of
For the six months ended limited General Limited Total
June 30, 1997 and 1996 Partnership Partners' Partners' Partners'
(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 income - 8,356 158,765 167,121
----------------- ---------------- ----------------- -----------------
Balance, June 30, 1997 649 $ (2,939,217) $ 1,343,133 $ (1,596,084)
================= ================ ================= =================
Balance December 31, 1995 649 $ (2,857,284) $ 2,899,876 $ 42,592
Distributions - (55,677) (1,057,870) (1,113,547)
Net loss - (10,331) (196,282) (206,613)
----------------- ---------------- ----------------- -----------------
Balance, June 30, 1996 649 $ (2,923,292) $ 1,645,724 $ (1,277,568)
================= ================ ================= =================
</TABLE>
See notes to financial statements
-5-
<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
1. ACCOUNTING AND FINANCIAL REPORTING POLICIES
The condensed financial statements included herein have been prepared
by Springhill Lake Investors Limited Partnership (the "Partnership"), without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. The Partnership's accounting and financial reporting policies
conform 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 Annual Report on Form 10-KSB.
The accompanying consolidated financial statements include the accounts
of the Partnership and the nine limited partnerships (collectively, the
"Operating Partnerships") prepared on the accrual basis of accounting. Theodore
N. Lerner's ownership in the Operating Partnerships 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 in 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.
-6-
<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 1997 (Unaudited)
3. INVESTMENT IN OPERATING PARTNERSHIPS
The following summarizes the results of operations for the Operating
Partnerships:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 (Unaudited) June 30 (Unaudited)
--------------------------------- ------------------------------------
1997 1996 1997 1996
--------------- --------------- ----------------- -----------------
<S> <C> <C> <C> $
Income
Rental income $ 5,853,804 $ 5,801,586 $ 11,743,043 $ 11,427,038
Interest and other income 277,585 231,422 572,253 505,841
--------------- --------------- ----------------- -----------------
6,131,389 6,033,008 12,315,296 11,932,879
--------------- --------------- ----------------- -----------------
Expenses
Depreciation 993,523 900,201 1,942,272 1,850,886
Operating expenses 2,798,352 2,563,012 5,986,271 5,730,588
Taxes and insurance 506,791 531,199 1,116,831 1,067,527
--------------- --------------- ----------------- -----------------
4,298,666 3,994,412 9,045,374 8,649,001
--------------- --------------- ----------------- -----------------
Net income $ 1,832,723 $ 2,038,596 $ 3,269,922 $ 3,283,878
=============== =============== ================= =================
</TABLE>
4. RELATED PARTY TRANSACTIONS
The Operating Partnerships paid or accrued to an affiliate of Three
Winthrop Properties Inc., (the "Managing General Partner") a property management
fee of $350,380 and $341,045 for the six months ended June 30, 1997 and 1996,
respectively. An asset management fee of $60,835 and $50,000 for the six months
ended June 30, 1997 and 1996 was paid to an affiliate of the Managing General
Partner.
5. RECLASSIFICATION
Certain items in the 1996 Statement of Operations have been
reclassified to conform with the current year presentation. In addition,
minority interest expense for 1996 has been recalculated to include a year-end
adjustment necessary for the fair presentation of the results of operations
through June 30, 1996.
-7-
<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 Investor 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 (i) interest payable on the
loan encumbering its assets (ii) administrative expenses and (iii) fees payable
to affiliates of the General Partners. 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 the Partnership's expenses. The
Operating Partnerships' cash and cash equivalents experienced a $53,540 increase
at June 30, 1997 as compared to December 31, 1996. The increase was due to
$867,351 provided by operating activities, which was partially offset by
$181,748 used in investing activities and $632,063 used for principal reduction
to the mortgage payable. At June 30, 1997, the Operating Partnerships' cash
reserves were $1,027,467. The Partnership also has a cash replacement reserve
account held by its lender. At June 30, 1997, the balance in the account was
$1,146,223. All other increases (decreases) in certain assets and liabilities
are the result of the timing of receipt and payment of various operating
activities.
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 $769,664 on capital improvements during the six months ended June 30, 1997
compared to $1,023,062 six months ending June 30, 1996. Improvements included
replacing appliances and bathroom tile in apartment units along with
expenditures on mechanical systems and structural improvements. Most of the
capital improvements are funded by replacement reserves held by the lender. The
balance in all reserve accounts was approximately $2,866,454 at June 30, 1997.
The Partnership resumed making cash distributions to limited partners in
1996. The Partnership intends to continue to limit cash distributions to fund
the capital improvements and reserves required for the project. However, the
performance of the partner's interest in the project and its distribution policy
will continue to be reviewed on a quarterly basis.
Results of Operations
The Partnership had net income of $167,121 for the six months ended June
30, 1997, compared to a net loss of $206,613 for the six months ended June 30,
1996. The positive cash flow generated by the Operating Partnership was used to
make improvements to the property and principal amortization payments on the
loan encumbering the properties.
-8-
<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
The Partnership's revenue increased by 3.5% for the six months ended June
30, 1997, compared to the six months ended June 30, 1996 due to increases in
rental and interest income which more than offset a decrease in laundry and
other income. Although average rental rates have remained relatively constant
since 1996, the Operating Partnership has recognized a modest increase in
average occupancy from 91.9% to 93.2%. This has resulted in an increase in
rental revenues from $11,427,038 for the six month period ended June 30, 1996 to
$11,743,043 for the comparable period in 1997.
The direct operating expenses remained relatively constant for the six
months ended June 30, 1997 as compared to the six months ended June 30, 1996.
Increases in taxes, bad debt, salaries and asset and property management fees
were offset by decreases in utilities, administrative expenses, repairs and
maintenance, advertising and rental expense and insurance. Other expense items
remained relatively constant.
Interest expense decreased to $2,764,759 as compared to $2,819,203 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 six months ended June 30, 1997 was
$2,023,338 as compared to $1,960,524 for the prior comparable period. The
increased expense was the result of the higher average cost of assets in service
between years.
The results of operations in future quarters may differ from the results of
operations for the quarter ended June 30, 1997, due to inflation and changing
economic conditions which could affect occupancy levels, rental rates and
operating expenses.
-9-
<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) No report on Form 8-K was filed during the three months ended June 30, 1997.
-10-
<PAGE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
SIGNATURE
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.
SPRINGHILL LAKE INVESTORS
LIMITED PARTNERSHIP
By: Three Winthrop Properties, Inc.
Managing General Partner
Date: August 14, 1997 By: /s/ Michael L. Ashner
---------------------
Michael L. Ashner
Chief Executive Officer
Date: August 14, 1997 By: /s/ Edward V. Williams
----------------------
Edward V. Williams
Chief Financial Officer
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from unaudited
financial statements for the six month period ending June 30, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 369,969
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 97,833,450
<DEPRECIATION> (43,324,223)
<TOTAL-ASSETS> 62,238,184
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (1,596,084)
<TOTAL-LIABILITY-AND-EQUITY> 62,238,184
<SALES> 0
<TOTAL-REVENUES> 12,375,284
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,004,496
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,764,759
<INCOME-PRETAX> 167,121
<INCOME-TAX> 0
<INCOME-CONTINUING> 167,121
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 167,121
<EPS-PRIMARY> 257.50
<EPS-DILUTED> 257.50
</TABLE>
